Pullback
Also called: retracement, pull back, throwback
A pullback is the most ordinary thing a market does. No trend moves in a straight line: after a run, some traders take profit, others wait, and price drifts back for a few candles. What matters is how deep it goes and how quickly price returns.
How to measure a pullback
Many traders measure a pullback as a percentage of the move before it. The ChartThread course measures it in the daily average true range (ATR), the instrument’s normal daily range.
Example. A share with a daily ATR of 4.00 rises from 100 to 120, a move of 5 ATR, and stops. Over the next five days it dips to 116: a pullback of 4.00, or 1 ATR. That is shallow. A dip to 108 would be 3 ATR, a deep throwback.
A small pullback after a big move
When an instrument makes a big move, stops, and pulls back only a little, the move is likely to continue and break the level where it stopped. Small losing players close out, and a big player stops the move with limit orders for a while. Once that player is filled, nothing stands in the way.
The course checked this on 306 big moves of 4 or more daily ATR that stopped, on 21 perpetual contracts from January 2024 to October 2026. The level broke by a daily close within 15 days:
| Pullback over the next 5 days | Level broke | Cases |
|---|---|---|
| Under 1.5 ATR | 47% | 19 |
| 1.5 to 2.5 ATR | 37% | 113 |
| 2.5 ATR or more | 21% | 174 |
The first group is small: read it as a direction, not a precise probability.
On a real market. Apple’s contract rose from 310.31 to 336.25 in three days, stopping on 11 September 2026. The deepest pullback over the next five days was to 328.60, only 1.2 ATR. On 17 September price closed above 336.25. In June, a fall stopped at 273.27 was thrown back 3.6 ATR within five days, and that level held.
Pullback vs reversal
A pullback ends with the trend continuing; a reversal ends the trend. You cannot tell them apart while they happen, so the course reads the depth of the move and the level it starts from. A level where a trend actually turned is a trend-change level.
Pullbacks as levels and prerequisites
- Near retest. A shallow pullback followed by a return to the level within 10 days favours a breakout. XRP pulled back 1.6 ATR from 1.3959 in April 2026, came back 7 days later and broke the level on 16 April.
- No pullback where one is due. After a false breakout or an abnormal candle into a level, price should pull back. If it does not, the break is being prepared. A squeeze is the extreme case.
- Retracement level. In an uptrend the low of a pullback becomes a level once the high is updated after it; in a downtrend, the high of the pullback once the low is updated.
Pullbacks in this course
See no level is strong on its own for the 306 cases, pillar three, direction for the near retest, and retracement levels for the level type.
Questions about pullback
What is the difference between a pullback and a reversal?
A pullback is a pause against the trend that ends with the trend continuing. A reversal ends the trend: price turns and keeps going the other way. At the moment it happens the two look the same, so the course does not guess. It reads the depth of the pullback and the level price is at.
Is a pullback the same as a retracement?
Yes, the two words are used for the same move. Some traders measure retracements as a percentage of the previous move, for example with Fibonacci ratios. The ChartThread course measures them in daily average true range instead.
What does a small pullback after a big move mean?
It often means the move will continue and break the level where it stopped. On 306 big moves that stopped, the level broke within 15 days in 47% of cases when the pullback was under 1.5 ATR, against 21% when it was 2.5 ATR or more.
How deep is a normal pullback?
There is no fixed depth. Compare it with the instrument’s daily ATR. A pullback of 1 ATR after a move of 5 ATR is shallow; a throwback of 3 ATR or more shows a player who is not just stopping the move but reversing it.