A minor pullback or change in the direction of a stock, index, or other financial instrument. Retracements differ from reversals in the sense that once they are over, there should be a continuation of the previous trend. Also, in a reversal, the price of a security needs to breach support or resistance levels. Instead, a retracement is a short-term period of movement against a trend. Of note, within technical analysis, a retracement must be taken within its own context and never in a vacuum. If not used correctly, any potential analysis will be misguided.
Retracement
Market Terms
We don't know everything about the markets. We're just devoted to learning. Taken from those smarter than ourselves, here's how we define Retracement.