Home / Trading Tips / How To Trade Pullbacks In Forex

How To Trade Pullbacks In Forex

User Rating: Be the first one !

If you wan’t to learn how to trade pullbacks, this post will help you understand and give you examples of pullback trading.

There are two main types of pullbacks:

  1. a pullback in an uptrend
  2. and a pullback in a downtrend.

Let me discuss each of these two pullbacks in detail…

A pullback is a temporary reversal of the current trend, either up or down. You see, the price action in the forex market moves like a wave:

  • in an uptrend market, you will see price continue to increase but even whilst it is increasing, there will be times when price will drop…then price rises up again going past its previous higher high.
  • in a downtrend market, the same but opposite happens…price will continue to fall but there will be times when it will rise only to drop back and go down past its prior swing low (lower low).

Its this price activity that creates zones of pullbacks. This chart below will make you understand this better:

How to trade pullbacks in an uptrend and downtrend

A pull back in an uptrend is when a you will see price will be going up in but loses its steam and then it falls back down temporarily…then it shoots back up again.

The price level or zone where it starts reversing and going back up is called the pullback zone:

How To Trade Pullbacks

Here an example of how you can trade pullbacks in an up trend:

How To Trade Pullbacks on an Up trend

A pull back in a downtrend happens when price will go up and then starts to fall down again.

The price level or zone where it starts reversing and going back down is called the pullback zone:

How To Trade Pullbacks In A Down Trend

I can only think of 3 main advantages of trading pullbacks and these are:

  1. you enter trades when the market is about to take off in the direction of the main trade.
  2. tight stop loss with less chance of getting stopped out prematurely
  3. tight stop loss means your risk:reward ratio increases which is a good thing.

If you think of other’s let me know.

Don’t forget to check out the rest of the forex trading strategies on this site, there are lots of trading systems that are built upon the pullback idea.

Check Also

2 Charts Reveal What Is The Trader’s Action Zone

Are you wondering what a trader’s action zone is? Well, you’ve come to the right …


  1. I enjoy what you guys are usually up too. This kind of clever work and reporting! Keep up the good works guys I’ve included you guys to my own blogroll.

  2. It’s awesome for me to have a web page, which is beneficial in support of
    my knowledge. thanks admin

  3. Hey there! This is my first comment here so I just
    wanted to give a quick shout out and say I really enjoy reading your
    articles. Can you suggest any other blogs/websites/forums that go
    over the same subjects? Many thanks!

  4. For latest information you have to pay a quick visit
    the web and on world-wide-web I found this site as
    a finest site for hottest updates.

Leave a Reply

Your email address will not be published. Required fields are marked *