Pullback

A pullback is a temporary price reversal against the prevailing trend. In an uptrend, prices pull back (dip) before continuing higher. In a downtrend, prices pull back (rally) before continuing lower. Pullbacks are a natural part of how markets move — prices don't go straight up or down without pauses.

Many traders consider pullbacks to be the best entry opportunities. Rather than buying at the top of a move (chasing), you wait for price to pull back to a support level, a moving average, or a Fibonacci retracement level, then enter in the direction of the trend. This approach gives you a better entry price and a clearer spot for your stop loss.

The challenge with pullbacks is distinguishing them from actual reversals. A pullback is temporary; a reversal is a change in the trend direction. There's no foolproof way to tell the difference in real time. Context helps — pullbacks in strong trends tend to be shallow and brief, while deeper, more prolonged pullbacks may signal that the trend is losing momentum.