Technical Glossary / Support, Resistance & Price Levels
Pullback
A temporary move against the prevailing trend.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A pullback is a counter-move inside a trend: a dip in an uptrend or a bounce in a downtrend. It is "temporary" only if the trend structure survives. If the pullback breaks the last higher low or lower high, it has become a possible reversal. Until then it is the pause trend traders try to buy or sell.
How to identify it
A trend, then a move the other way that is smaller than the impulse and that does not break the trend's structure level. Flags, two-leg dips, and single candles can all be pullbacks. The name describes the role, not a fixed shape.
Bullish reading
In an uptrend, the pullback is the long location: nearer the higher low, with that low as risk, rather than at the high of the impulse.
Bearish reading
In a downtrend, the pullback is the rally into the lower high. Selling the bounce, not the breakdown candle, is the pullback short.
Common mistakes
Calling a reversal a pullback after structure has already broken, because the original thesis has not been updated. Also buying a pullback that has retraced the entire impulse.
Limitations
Pullbacks can keep going. "Buying the dip" without a price that proves you wrong is not a pullback trade. It is averaging.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.