Pullback

A Pullback is a temporary counter-trend move within an established trend, a dip in an uptrend or a rally in a downtrend, that does not break prior structure. Pullbacks offer statistically favorable continuation entries because the trader joins the trend at a better price than buying/selling into the extension.

Pullback quality is judged by depth and volume. Shallow pullbacks (Fibonacci 23.6%–38.2% retrace) in strong trends are the highest-probability entries but fire less frequently. Deeper pullbacks (50%–61.8%) fire more often but carry higher failure risk. They can transition into full trend reversals. Volume should decline during the pullback (showing absence of genuine opposing conviction) and rise on the resumption. The classical Two-Leg Pullback pattern is specifically about requiring the pullback to consist of two distinct moves before entry, filtering out single-leg fake moves that tend to continue.