What is a Retracement?

What is Retracement in Stocks?

The stocks price of a stocks instrument does not move up or down in a straight line. Instead the stocks price moves up or down in a zigzag pattern called a stocks trend - in this pattern the stocks price moves upward in a stocks trend then it retraces before resuming the stocks trend direction - in a downward trend the stocks price moves downward in stocks trend direction and then retraces before resuming the stocks trend direction.

What is a retracement? A stocks price retracement is a pull-back of the stocks price before the stocks market resumes the original stocks trend movement.

Example of Zigzag Stocks Price Movement: The example illustrated and explained below shows stocks price moving up in a zigzag pattern showing stocks price trend and stocks price retracement.

The example illustrated and explained below shows movement in an upward market and stocks price retracement.

What's Retracement? - What is a Stocks Retracement? - Stocks Price Retracement Explained With Example

What is Retracement Trading in Stock?

1-2: Stocks Price Moves Up - Stocks Trend Direction

2-3: Stocks Price Retracement

3-4: Stocks Price Moves Up - Stocks Trend Direction

4-5: Stocks Price Retracement

5-6: Stocks Price Moves Up - Stocks Trend Direction

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