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Hello all, novice here. I would like an explanation of a pullback. Because in a bull trend let's say on a five minute chart Al list a pullback as a long upper wick within the trend as an implied pullback. But then just a few minutes later he also references a pullback as a candle with a long lower wick in a bull trend? So, is it both because they have long wicks or is it the upper or lower wick? Thanks in advance!
Hi,
as far as I understood Al means that even one bar can be seen as a pullback. Also consecutive bars can be a pullback as well. I looked on those one bar pullbacks on a smaller time frame to understand better how they are forming. Try this for yourself to get an understanding what is happening on M1 while a bar is forming on M5 would be my suggestion here. So from my point of view it depends a lot of the context what can be defined as a pullback.
A pullback is counter trend move that is then resume back up into the original trend. So a pullback can be very small like a one bar pullback, or many bars.
he also references a pullback as a candle with a long lower wick in a bull trend
That is an even smaller pullback. The long wick was the result of a counter trend move when the bar was forming that was then reversal up by the bar closed.
A pullback is any pause in the up to then prevailing trend.
Pullbacks can be:
- in space (deep and fast) usually attributed to profit takers
- in time (take a while but not cover much distance/flat) usually attributed to either lack of interest (low volume) or big limit traders entering in the opposite direction but not yet actively initiating at market a.k.a final flags
- just a single small bar
There is no "definitive" pullback. Pullbacks are a natural part of market cycle. As a trend loses momentum, pullbacks increase in magnitude as more with trend traders begin to take profits and more counter-trend traders initiate fresh positions. And depending on the strength of the prevailing trend, pullbacks can start small or big, it depends on the context.
Ok. Thank you. But I am talking about in the context of what Al was speaking on. In a bull trend he referenced a pullback as both a long tail on top and also on the bottom of the bar. I am just wondering was that a mistake or is a pull back in a bear trend also when you see a long tail on top and/or the bottom of the bar?
Thank you! This was what my question was about. But I appreciated all the feedback much obliged. GOD you guys sound so smart in here, I hada reread the answer like three times in order to even remotely understand. But I'm on my way. Much obliged.
Is there a percentage of how often the pullback fails and becomes a reversal?
also there is an implied pb
Can a dojo bar in a breakout also be considered as a pause (PB) even if it doesn’t go below the low of the prior bar ( more of an implied PB )
Hi Satya, check out my 2c (i could be wrong)
Hi Satya,
The annotations were my take at describing the pullbacks - the ones that are inside bars, and the breakout bars with the small tails - both imply the inferred pullback 🤔
I could've gotten it all wrong ...
yeah..it seems to be alright, although Al sometimes uses an alternative terminology where pause bars ( dojis which do not fall below the low of prior bars ) are also called as pullbacks. you can go through market cycle videos to learn about this.
