Pullback¶
A pullback is a temporary countertrend decline of roughly 3–10% within an established uptrend that holds above the prior swing low and key moving averages, after which the primary trend resumes. Unlike a reversal, the sequence of higher highs and higher lows remains intact throughout. Traders treat pullbacks as the standard mechanism for entering an existing trend at a better price than chasing the high.
HOW IT WORKS¶
A valid pullback requires three conditions to be met: a prior trend with at least two higher highs and higher lows, a shallow retracement that holds above the prior swing low and respects the 20-day or 50-day moving average or the 38.2–61.8% Fibonacci retracement of the last impulse leg, and volume contraction on the decline relative to the 20-day average. Rising volume during the decline signals distribution rather than a healthy pause. As a rule of thumb, a sub-10% decline that holds structure is a pullback; 10–20% is a correction; a break of the prior swing low on expanding volume is a potential trend reversal. Once a decline retraces more than 61.8% of the prior leg, continuation probability drops sharply.
IN TAPEBOARD¶
Use the Chart panel to overlay the 20-EMA and 50-day moving average and watch for price to compress into those levels on declining volume bars in the Volume lane. The Tape view lets you monitor real-time order flow during the retracement to confirm selling pressure is thinning rather than accelerating. Set an alert on a break of structure back to the upside to get a mechanical long trigger without watching the screen continuously. Place your stop below the pullback swing low; if that level breaks, the trade thesis is invalidated and Tapeboard's risk calculator will size the position accordingly.