Trading strategies

Pullback

Defined in 1 lesson · Updated October 17, 2026

Definition

A pullback is a short move against the trend before it continues, such as an uptrend dipping back toward VWAP or a moving average. Buying a pullback in an uptrend lets you use a tighter stop than buying at the high.

Example

Say a stock in an uptrend climbs from $60.00 to $66.00, then dips to $63.20 near its 20-period moving average and turns up. Buying at $63.20 with a stop at $62.40 risks $0.80 a share, while buying at the $66.00 high with that same stop would risk $3.60, four and a half times as much. If price keeps sliding below $62.40, the dip was more than a pullback.

Hypothetical numbers, for illustration only.

A chart labeled with this section's terms: a range between green support and red resistance at $50; a false breakout that trades up to $50.20 and closes at $49.85; a breakout that closes above $50; a retest where old resistance acts as support and the zone turns green; then a pullback and an uptrend of higher highs and higher lows.

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