A market pullback is a temporary decline in the price of an asset within a broader trend. In a bullish market, the price dips slightly before continuing its ascent, while in a bearish market, there may be a temporary increase in price before it continues to fall. These movements are often caused by natural corrections in supply and demand, unexpected news, or profit-taking by investors.
Why is it relevant?
For beginner traders: It helps differentiate between a pullback and a trend reversal, avoiding hasty decisions.
For specialists: It offers strategic entry or exit opportunities, as pullbacks often mark key levels of support or resistance.
Practical example: In an uptrend, a pullback can be an ideal time to buy before the price continues to rise.
Have you used pullbacks in your strategy? Share your experience!