Pullback
Technical Analysis
What it means
A short move against the trend after a breakout or impulse, before the trend resumes. It offers a lower-risk entry than chasing the initial move.
Example
A stock breaks from $100 to $110, then dips to $105 on light volume before resuming up to $120. The dip to $105 was the pullback -- the safer entry point.
Mistake beginners make
Beginners confuse a pullback with a reversal and exit too early, or wait forever for a "perfect" pullback that never comes and miss the move entirely.
Related terms
- Breakout — When price moves clearly beyond a support or resistance level, often with rising volume. I…
- Trend — The overall direction price is moving over a period. Up trends make higher highs and highe…
- Support — A price level where buying tends to appear and stop a decline. Price has bounced there bef…