A retracement is a temporary reversal in the direction of a stock’s price that goes against the prevailing trend. In other words, it’s a short-term pullback within a larger bullish or bearish movement. Traders often use retracements as opportunities to enter or exit trades, depending on their trading strategy.
Similar to a pull back but retracements may also pull back a significant amount indicating a reversal instead of a temporary pause before continuation.
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