Module 5: Pullbacks, Retracements & Retests · Lesson 74/144
7 min 55 XP
A pullback is a pause inside an existing trend — price retraces part of an impulse and the trend resumes. A retest is specifically a return to a broken level (old support/resistance, a trendline, a pattern neckline) to see if it now holds from the other side. A pullback is about the *trend*; a retest is about a *level*. In practice they often combine: price breaks a level, pulls back to retest it, and that retest IS the pullback you join.
How to validate either one
Same checklist. (1) Structure intact — prior swing not broken on a close. (2) Price reaches a real reference — a level, a zone, the right depth. (3) A confirming candle CLOSES in the trend direction (rejection wick or engulfing). (4) Your stop sits just beyond the level, so being wrong is cheap. No confirming close = no trade.
The single most common mistake is acting on the wick, not the close. Price spikes the level, you jump in, and the candle closes straight back through — a trap. Markets pay people who wait for the close. The wick is bait; the close is the signal.