Learning about the different terminologies used in the Forex market is very important, especially if your goal is to be profitable in the said market. Just like how you need to familiarize yourself with any kinds of things in order to perform well, you need to be highly knowledgeable about the forex market in order to be successful.
Today, we will discuss another Forex-trading term, which, if well-understood, can significantly boost the profiting potential of your trading strategies. In this article we will tackle about what “pullbacks” are in Forex trading, and what causes them to appear in the forex market.
First of all, what is a pullback? A pullback is a term used to describe a situation where a security falls back from its highest price. This kind of movement in price might be recognized as a brief reversal of the current upward trend, indicating a slight pause in a continuing upward momentum.
Pullbacks normally occur after a security sees a significant increase in its price. Usually, they are considered as buying opportunities after a security has experienced a notable surge in its value.
However, it is important to carefully analyze any pullback as it may be an indication of a definite trend reversal or a slight pause in the upward momentum, each having very different trading implications.