Understanding the Difference Between Pullback and Reversal
A pullback is a temporary movement against the prevailing trend.
A reversal is a potential change in the broader market direction.
For example, during an uptrend:
Pullback:
- Price moves lower temporarily.
- Important bullish structure remains intact.
- Buyers may regain control.
Reversal:
- Key swing structure breaks.
- Price fails to continue making higher highs.
- Selling pressure begins dominating.
One bearish candle does not automatically mean an uptrend has reversed.
Key takeaway: Study the structure before changing your directional bias.
How do you differentiate a pullback from a reversal?
