Retracement trading is a strategy for entering trends at favorable prices when the market briefly pulls back before continuing its direction.

Retracement trading is a strategy for entering trends at favorable prices when the market briefly pulls back before continuing its direction. Instead of chasing breakouts, traders wait for temporary dips in an uptrend or rallies in a downtrend to seek higher reward-to-risk entries. By analyzing swing highs and lows, support and resistance, and tools like Fibonacci retracement levels (38.2%, 50%, 61.8%), you can frame objective zones to plan entries, stops, and profit targets. Confluence—multiple signals aligning, such as a key level with moving averages, RSI, or volume—helps filter low-quality setups. The goal is simple: trade with the trend, but from value, not from extremes. This approach can reduce whipsaw, improve timing, and standardize risk management through predefined invalidation points. Whether you day trade or swing trade, retracement trading works across timeframes when paired with a clear plan, disciplined risk limits, and consistent review. Learn how to spot pullbacks, confirm momentum, and build rules that fit your style.

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