What is Pullback / Retracement?

A temporary move against the trend that offers a better price to join it — the professional's preferred entry.

A pullback, or retracement, is a temporary counter-move within a trend: the dip in an uptrend or the bounce in a downtrend. Trends do not travel in straight lines — impulsive legs in the trend's direction alternate with corrective legs against it, as early participants take profit and new ones position themselves. The pullback is where a trend-following trader gets paid for patience, buying the dip toward a meaningful zone instead of chasing the extended move.

The craft is judging where a pullback should end and when it has become a reversal instead. Healthy retracements tend to hold above the previous protective swing, often returning to a logical destination — an order block, a fair value gap, a discount level of the range, a moving average. If price instead breaks the swing that defined the trend, the pullback has graduated into a change of character and the trend is in question. This is why we teach entries on the pullback into a zone with confirmation, rather than market orders into a running move: the stop is smaller, the risk:reward better, and the invalidation obvious.