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What Is Pullback in Trading

Pullback in trading refers to a retracement during an impulse move, characterized by bearish candlesticks in a bullish market and bullish candlesticks in a bearish market. A valid pullback requires specific criteria to be met, including marking the highest or lowest candlestick and checking if the subsequent price action confirms the pullback. The document outlines the steps to identify valid pullbacks in both bullish and bearish markets.

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623 views3 pages

What Is Pullback in Trading

Pullback in trading refers to a retracement during an impulse move, characterized by bearish candlesticks in a bullish market and bullish candlesticks in a bearish market. A valid pullback requires specific criteria to be met, including marking the highest or lowest candlestick and checking if the subsequent price action confirms the pullback. The document outlines the steps to identify valid pullbacks in both bullish and bearish markets.

Uploaded by

jonnymia666
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

What is Pullback in Trading?

Pullback in trading is basically a retracement of an impulse move which can be with a


single candle or number of candlesticks.

Bearish candlesticks in a bullish move and bullish candlesticks in a bearish move are
simply called the pullbacks.

What is Valid Pullback in Trading?


As we discussed earlier pullback is a retracement move, but every retracement is not a
valid pullback.

We will be dividing valid pullback in two types listed below.

Valid Pullback in Bullish Market


As you know when prices move higher its called bullish market, So in bullish market the
bearish candles are simply the pullbacks.

But to identify a valid pullback in bullish market you have to check following things.

(I) Mark the highest bullish candlestick before the pullback candlestick.
(II) Mark the low of that highest bullish candlestick.
(III) Check if the low of that highest bullish candlestick is grabbed by the pullback
candlesticks.
(IV) Check that after low (of the highest bullish candlestick) being grabbed the high (of
the highest bullish candlestick) is broken.
For grabbing the low , you just have to check if price went below the low no
matter by just a wick or candlestick closing
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But for breaking the high closing of candlestick above the high is compulsory
A real market example is shown below in the picture.
Valid Pullback in Bearish Market
As you know when prices move lower its called bearish market, So in bearish market
the bullish candles are simply the pullbacks.

But to identify a valid pullback in bearish market you have to check following things.

(I) Mark the lowest bearish candlestick before the pullback candlestick.
(II) Mark the high of that lowest bearish candlestick.
(III) Check if the high (of that lowest bearish candlestick) is grabbed by the pullback
candlesticks.
(IV) Check that after high (of that lowest bearish candlestick) being grabbed the low (of
that lowest bearish candlestick) is broken.
For grabbing the high , you just have to check if price went above the high no
matter by just a wick or candlestick closing

But for breaking the low closing of candlestick below the low is compulsory
A real market example is shown below in the picture.
NOTE : This all phenomenon of valid pullback may happen with a single candlestick or
number of candlesticks.

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