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Pullback

Learn What is PULLBACK and WHY It is Important For TRADING In the today's post, we will discuss the essential element of price action trading - a pullback. There are two types of a price action leg of a move: impulse leg and pullback. Impulse leg is a strong bullish/bearish movement that determines the market sentiment and trend. While a pullback is the movement WITHIN the impulse. The impulse leg has the level of its high and the level of its low. If the impulse leg is bearish, a pullback initiates from its low and should complete strictly BELOW its high. If the impulse leg is bullish, a pullback movement starts from its high and should end ABOVE its low. Simply put, a pullback is a correctional movement within the impulse. It occurs when the market becomes overbought/oversold after a strong movement in a bullish/bearish trend. Here is the example of pullback on EURJPY pair. The market is trading in a strong bullish trend. After a completion of each bullish impulse, the market retraces and completes the correctional movements strictly within the ranges of the impulses. Here are 3 main reasons why pullbacks are important: 1. Trend confirmation If the price keeps forming pullbacks after bullish impulses, it confirms that the market is in a bullish bearish trend. While, a formation of pullbacks after bearish legs confirms that the market is trading in a downtrend. Here is the example how bearish impulses and pullbacks confirm a healthy bearish trend on WTI Crude Oil. 2. Entry points Pullbacks provide safe entry points for perfect trend-following opportunities. Traders can look for pullbacks to key support/resistances, trend lines, moving averages or fibonacci levels, etc. for shorting/buying the market. Take a look how a simple rising trend line could be applied for trend-following trading on EURNZD. 3. Risk management By waiting for a pullback, traders can get better reward to risk ratio for their trades as they can set tighter stop loss and bigger take profit. Take a look at these 2 trades on Bitcoin. On the left, a trader took a trade immediately after a breakout, while on the right, one opened a trade on a pullback. Patience gave a pullback trader much better reward to risk ration with the same target and take profit level as a breakout trader. Pullback is a temporary correction that often occurs after a significant movement. Remember that pullbacks do not guarantee the trend continuation and can easily turn into reversal moves. However, a combination of pullback and other technical tools and techniques can provide great trading opportunities. Please, let me know if you have any questions! Also, please, support this post with like and comment! Thank you for reading!
OANDA:XAUUSDEducation
by VasilyTrader
32
#GBPJPY buying opportunityHello, traders and friends. Let's analyze the GBPJPY 1-hour timeframe chart and explore a potential buying opportunity in this pair. Yesterday, the price successfully broke above a Daily bearish channel that had been pushing the price lower since August 21st. This impulsive breakout to the upside suggests the potential for the price to move higher, possibly reaching at least the high established yesterday. Another factor supporting our belief in a potential buying opportunity is the bearish corrective move that followed the breakout, indicating no strong overall bearish bias in the price for now. There are several bullish confluences that reinforce our bias, including: The bearish channel's upper line, now acting as support. A demand area on the 1-hour timeframe, coinciding with a static support zone. The price is currently above the 4-hour, 1-hour, and 30-minute 200EMA, all of which serve as critical support levels. The price is currently at the 38% Fibonacci level, and if it reaches the support line, the 50% Fibonacci level will also provide significant support. To consider a long position, we recommend waiting for the price to break the short-term bearish trendline to the upside or looking for candlestick confirmation around the supporting area. by the way If you've found this analysis helpful, please take a moment to like, comment, or share your thoughts with me.
Long
by mohemati
3
DXY (Dollar index) Retracement back up to 105.600Following from last week hectic week of news events, we had a nice end on NFP friday giving us a clear indication on what price wants to do. As you can see the dollar has been ranging on the higher time frame, generating liquidity and testing new possible highs however failed to do so. Scenario (A) - We have a strong bearish candle breaching the low of the range, breaking the structure to the downside. This hints that the dollar wants to move in a bearish trend and possibly want to take the HTF trendline below that was left from the previous rally. From this move, we have marked out new supply zones that we can sell from to continue this expansion. As of current price we have entered a nice (4hr) demand zone that has previously caused BOS to the upside this can allow us to buy back up towards the supply above. Already we see a nice reaction within the zone as well as price accumilating so we can possibly look for nice buys on monday once we get a CHOCH on the LTF's. We will then target the 13hr supply zone above as thats our main POI for a potential sell setup to form. Scenario (B) - Is that price continues to the downside and fails this zone to sweep the liquidity below. As theres a lot of asian lows and engineering liquidity, price can easily take this to tap into the daily demand which is a better zone to buy from to target the supply above around 105.500. My confluences for short term dollar (DXY) buys are as follows: - Price tapped into a 4hr demand that broke structure to the upside. - Wyckoff accumilation is starting to formulate due to the slow movement inside the zone. - Imbalances left above from NFP news event that price needs to come fill. - If price wants to continue in this bearish trend it must retrace back to the supply above. - Liquidity from the previous low has also been swept (which is the bottom of the range) - enough liquidity to possibly cause price to retrace back up to 105.600. P.S. From last weeks DXY breakdown (29/10/23), My scenario (A) played out how I expected as price respected my 7hr supply zone that I marked out and melted perfectly from that zone which caused price to break structure to the downside. I am temporarily bearish on the dollar so our next POI's to continue this order flow will be at the 13hr supply or the extreme (7hr) above.
CAPITALCOM:DXYLong
by Hassan_fx
2
US500 expecting a bounce? Here are my thoughts.US500 (Daily Chart) I'm expecting a bounce to ~4260/70 area. Here's why. Looking at the AVWAP (Blue lines) from the January 2022 highs and October 2022 lows, we were bound to see some level of support here. I've been saying this for some time now that we'll reach at least 4100. Given the strong confluence of support around this area (the AVWAP and the horizontal level), I'm expecting a bounce from here. The target for the bounce would be somewhere around the 4260/70 area. If you look at the previous rallies in this correction they're both ~4.7% from the lows of the down moves. If we consider this to be the low of the move, ~4.7% lines up with the 4260/70 area along with the white trend line and potentially with the 50EMA as well, by the time price gets there. What will determine if this rally will stick or not will be the volume behind the moves. If you look at the volume in the previous rallies you can see that the volume was decreasing quite a bit and rose again as the price began to move lower. If this rally is to be sustained, we're going to need to see volume and broader participation from the market, otherwise, if/when we get to the 4260/70 area we'll see the next leg lower. Of course, there will be levels of resistance along the way such as the 4170 area and the 4210 area. As always, be sure to DYDD and be sure to manage your risk.
PEPPERSTONE:US500Long
by HaseebKhan_90
#EURGBP buying opportunityHello, traders. Let's examine the EURGBP chart, where the price is currently completing a pullback to the broken short-term bearish trendline after a change in market structure towards the upside. This provides us with an opportunity to position ourselves in alignment with the higher time frame. When you review the Daily timeframe, you'll notice a bullish impulsive move that has occurred. Since reaching the recent high, we've been experiencing a bearish corrective move until yesterday. The price reached a critical support area and formed a bullish engulfing candle, which closed above the high of the previous doji candle. This suggests that the bearish momentum may be coming to an end. Following the formation of the daily bullish engulfing candle, on the 4-hour timeframe, we observed a downward move. The price retraced to approximately 50% of the previous day's candle and approached the 200 EMA. These factors provide significant confluence for considering a buy position from this area. Furthermore, the price is currently testing the daily pivot area. Since the price opened above the pivot and is now testing it from above, this indicates that the price may continue its bullish momentum.
Long
by mohemati
3
TSLA watching for 255-253 again todayThis move is highly unsustainable for NASDAQ:QQQ - I called a bull run this morning @ 10 AM. We are up +2% almost on AMEX:SPY SP:SPX AMEX:DIA - watching for pull back now on buyer weakness and reality setting in. But why TSLA? Why not NASDAQ:NVDA or NASDAQ:AMD ? TSLA had "bad news" today With a market pull back, TSLA will get smacked the hardest. Maybe even back to 250. Risking $40 on 0dte to potentially make $200. High R/R. I ran out of minds so posting here.
NASDAQ:TSLAShort
by kingdips
2