GLOSSARY

RETRACEMENT

25 May 2016 By PDSNET

A price movement in the opposite direction of the trend. These are corrections (in a bull trend) or a rallies (in a bear trend). A retracement implies that some of the ground lost or gained is given back before the underlying trend reasserts itself. It does not signify the reversal of the trend. It can be difficult to determine whether the move in the trend is a retracement or a reversal, as a retracement does not have a specific time period. Technical analysts use such things as the Fibonacci retracements, pivot points, as well as support and resistance trendlines to determine if the trend is in fact reversing. In an uptrend, while a reversal may indicate that a security should be sold, a retracement can be looked at as a buying opportunity.

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