How Do You Read a Retracement?

How Do You Trade a Retracement?

The price of a forex instrument doesn't move up-ward or down-ward in a straight line. Instead the price moves up or down in a zigzag pattern called a trend

Up-wards trend - price moves upwards in a upwards trend then it pulls back before it resumes the up-wards trend direction

Downwards trend - price moves downwards in trend direction & then retraces before resuming the down-wards trend direction.

How Do I Analyze a Retracement?

A price retracement is a pullback of the price before the price resumes the original trend movement.

Retracement Meaning

How Do You Read a Retracement?

How Do I Analyze a Retracement?

1-2: Price Moves Up - Trend Direction

2-3: Price Retracement

3-4: Price Moves Up - Trend Direction

4-5: Price Retracement

5-6: Price Moves Up - Trend Direction

The price retracement definition is explained on the above example - this represents a retracement in an upward trend.

How Do You Read a Retracement?