A market pullback is a temporary decline in asset prices, typically 5-10%, within an overall upward trend. It occurs when investors take profits, or sentiment shifts due to economic data, geopolitical events, or overbought conditions. Pullbacks are healthy for markets, preventing bubbles and offering buying opportunities. They differ from corrections (10-20% drops) or bear markets (over 20%). Technical indicators like RSI or moving averages can signal potential pullbacks. For example, a stock index might dip after a strong rally, consolidating before resuming its trend. Investors often use pullbacks to reassess strategies, while traders may capitalize on short-term price movements.
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