A pullback is a short-term price movement against the main trend, which is temporary and often presents an opportunity to enter a trade in the direction of the trend. Pullbacks usually occur when the market “takes a breather” after a sharp move—traders take profits, causing a brief correction or consolidation. Then, if the trend continues, the price bounces back in the direction of the original trend.
Why the local pullback?
If we are speculating on a price increase and there is a confirmed uptrend, it is often better to wait for a short-term pullback. This allows us to enter the trade at a more favorable price rather than buying at the peak. By doing so, we increase the profit potential while reducing risk, as we are trading in the direction of the trend but after a slight correction.
Answers and Score
| ANSWER | SCORE | PRIORITY |
| Yes | 10 | 1,3 |
| No | 5 | 1,3 |
| Cannot be defined | 3 | 1,3 |
Where to find a pullback?
You can find a pullback in these charts. For example, on finviz.com or finance.yahoo.com
This question is part of this analyzer.
| Decameron Stock Analyzer – Swing trading, v.1.0 | open analyzer |
