Retracement
Technical AnalysisSponsored Content

Curriculum Content
A price can move too far and be due for a retracement, also known as a pullback. In all of these cases the price stops moving in its trending direction, and moves in the opposite direction to the trend for a short period of time. This commonly occurs in overbought or oversold conditions or after a trend.
The reason retracements occur is rather simple. Trends occur due to the mass selection of investment positions. The purchase of assets for new positions or closing of short sales, extends an upward price trend. The sale of owned assets or short sale as new positions extends a downward price trend.
People who are entering new positions, at some point they will be forced to close those positions to solidify their paper profits. In an uptrend, asset owners must sell assets to take their profits. Sales create downward pressure, resulting in a retracement downwards. After the sales are completed, upward price movements may resume.
In a downtrend, short sellers must buy assets to take profits and close positions. The buying increases demand and temporarily results in a reversal, creating upwards price movements. After a retracement upwards, which is also known as a dead cat bounce, the price trend often resumes downwards.
While a retracement is occurring, you often will not know if it is a retracement or a reversal in formation. Don’t try to guess where a retracement will end, since you don’t yet know if the trend will continue after the correction or bounce. In many cases, volume will be very light during a retracement or bounce and heavier volume will indicate a full reversal, but reliability is questionable. This is not the only possible signal. You won’t see a bounce or retracement cross important resistance or support levels, and usually stop before violations. If a crossing occurs, the chance the retracement is a reversal increases.
Did we help you? Vote with a Crypto-Donation!
Visit on Steemit!
Support us on Steemit!

Donate Bitcoin
141FSmuHkMSZVsQQtE9GHSPyj6gAonqqWR

Donate Dash
Xr4fdtP78Mh3gnVwAUjjuZRCq3kubaHZ5o

Donate Litecoin
LcrxGsshB2j9SddnZNdLfYMsDqAtw3Dr9v

Donate Iota
LXIVNBVHRYBOHRWNGMBNHOYMT9GBEFTPQMKDUZUYYHGMPXOOEYETMUQZXWXCGWBMTFERLW9LMCKNUDCKAMDOQCNDNZ
Visit on D.Tube!
Support us on D.Tube!

Donate Bitcoin Cash
14NCVeGCZfHf7tiy9N2Yz1mrBNi9m2mQ4S

Donate Ethereum
0xAF7d66B09F34833Ccec1Ed9e4D356D40c09698e5

Donate Ripple
raiZ2rCXLeBTUh2A4voKALZpMxQ88KxZxm

Donate Monero
42byh9AjzB3XXRptSeSfzAGC588HRZgVXAGMay6yYKjjAHinUxdQkxw3Ay1XcziXV86XY57aRqG5kGnJ8LFWmSjmAnUEnYh
International Economic Analysis:
- Major Currency Economic Summaries
- Performance of Major Imports and Exports
- Mandates of Central Banks versus Expectations
- Performance Indexes of Major Economies
- Economically Correlated Currency Projections
- Large Funds Currency Sentiment Readings
- List of Technical Indicators to Look For
- Occasional: Foregin Exchange Technicals Markups
American Markets Analysis:
- Summaries of American Economic Structure
- Performance of Major
- Imports/Exports
- Federal Reserve Mandate versus Expectations
- Performance Indexes of U.S Economy
- Economically Correlated U.S Dollar Projections
- Large Trading Fund Index Sentiment Readings
- Market Wide Earnings Versus Valuations
- Fundamental Ranking of U.S Business Sectors
- Best and Worst Future Consensus Estimates
- Occasional: Firm Fundamental Strength Report
- List of Technicals to Look for While Trading
Storefront
Investment and Finance, Serviced by Amazon
No Results Found
The page you requested could not be found. Try refining your search, or use the navigation above to locate the post.