Retracement Definition

A retracement is a temporary reversal in the direction of an asset's price within a larger overall trend.

What is a Retracement?

Retracements are considered a normal part of price movement and are often measured using tools like Fibonacci levels.

They differ from a full trend reversal, as the original trend typically resumes afterward.

A currency pair pulling back 40% of a recent rally before continuing higher is showing a retracement.

A rally is a sustained period of rising prices in an asset or market, often following a decline or period of stability.

Range trading is a strategy that involves buying near support and selling near resistance within a defined price range.

Rate of return is the gain or loss on an investment over a period of time, expressed as a percentage of the initial investment.