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Related terms
An analysis of price going down. When a trader is bearish on a pair, they think the market will be heading down. A trader is a bear in the market when placing or holding short positions.
An analysis of price going up. When a trader is bearish on a pair, they think the market will be heading up. A trader is a bull in the market when placing or holding long positions.
A bearish trend that consists of lower lows and lower highs.
A tool used by technical traders can be used to distinguish retracements from reversals in the market. A Fibonacci retracement tool can help you find entries, set a take profit, and a stop loss.
When price retraces in the opposite direction of the overall trend. It’s a quick pause in the overall trend before eventually continuing in the original trend.
A level where price bounces off of, also known as the ceiling. It works hand in hand with Support as it is the opposite but it does the same thing.
A term used to describe the overall change in market direction.
Uptrend is a rise in price which describes the direction in which the market is heading. When price is in an uptrend you will see it make higher highs and higher lows.
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BeginnerEarly Stages for Beginners8 Topics
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Forex Terminology11 Topics
- Major and Minor Currency Pairs
- Basic Forex Terminology
- Pips & Ticks
- The Broker & The Spread
- What is a Lot?
- Stop Loss & Take Profit
- Margin & Leverage
- Retracement & Reversal
- When Can I Trade Forex? Sessions - Market Open and Close
- 3 Types of Analysis (Technical, Fundamental, Sentiment)
- 3 Ways a Market Can Go (Up, Down, Sideways)
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Margin & Leverage2 Topics
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IntermediateIdentifying Scams2 Topics
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Brokers for Beginners5 Topics
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Technical Analysis13 Topics
- Types of Charts
- Understanding Japanese Candlesticks
- Candlestick Patterns For Beginners
- Single, Double & Triple Candlestick Patterns
- Support and Resistance
- Confluences w/ Candlesticks & Support & Resistance
- Trendlines
- Counter Trend Trading/ Counter Trend Lines
- Fibonacci
- Moving Average
- Top-Down Analysis
- Fakeouts
- Consolidation Trading (Breakout, Retest, Continuation)
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AdvancedUsing Indicators6 Topics
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Technical Analysis (Part 2)8 Topics
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Market Structure5 Topics
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Fundamental Analysis9 Topics
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CompletionRisk Management for Beginners8 Topics
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Psychology for Beginners7 Topics
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Personal Psychology Questions2 Topics
Difference Between Retracement & Reversal
When you see an impulse move in the market, it is always followed by what we would call a “retracement”. You know when you’re moving so quickly that you end up losing something along the way, you retrace your steps until you find the place you lost it along the way? Well that is what price does before continuing on its path. The market makes an impulsive move up/down and retraces until continuing in the direction of the impulse move. After the retracement, is where you’ll find the best entries to place a trade.
A reversal in the market is a shift in the direction of the previous trend. Let’s say that price is in an uptrend and it makes a higher low and then a higher high. When price comes back down and breaks that higher low, more times than not, price is indeed reversing. That is what we call “a break of structure.”
Below is a chart of a bullish market that reversed into a bearish market.
There are tools to identify both of these occurrences in the market. To identify a retracement, most traders use the Fibonacci tool and counter trendlines. To identify reversals, most traders use trendlines and horizontal rays/lines. Using these tools can be very beneficial to your trading.