Retracements: Short term price corrections during an overall larger either upward trend or downward trend. Retracements are price corrections and temporary price reversals that do not indicate a change in the direction of the larger trend. These retracements can be used for short term trading ( scalping or day trading … or longer time frames). The main benefit of retracements are: you can enter a trade at a better price, just before the continuation of the original move. Why retracements occur? When more traders jump on a trade, some traders will take profit & close there trades causing a retracement to happen, or correction of major trend. Retracement Rules: 1) Buy pullbacks in an uptrend
2) Sell pullbacks in an downtrend *Example on 4 hour chart is a bearish trade with a retracement back into the golden zone of 38.2% to 61.50% which most reversals occur in, back into the major trend on that time frame. My advice is use Fibonacci indicator on 1 hour or higher to reduce the price action noise.


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