Do you know what a retracement is?
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If you open up any chart of an asset, you’ll see them. They are a ubiquitous part of how price moves for any given asset. Do you notice how even in a strongly trending market, price does little dips or peaks which go counter to its general movement, before resuming its course?
Those little reversals are called retracements. A retracement is a temporary reversal in the direction of a financial instrument’s price movement. There is then a correction and price continue along its way.
They are common at any point in price movement, and may also occur at the beginnings of trends.
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