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What Is a Pullback

A pullback is a move against the trend that ends and lets the trend continue. This paper shows you a real one drawn from the euro's rise of May to July 2025, how its depth is measured against the leg before it, the pullback on the daily chart, the last low of the trend that it stayed above, and how to fence one off with two vertical lines on your platform.

Difficulty
Intermediate
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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A step back

A pullback is a move against the trend that ends and lets the trend go on. From 12 May 2025 the euro against the dollar rose 566 pips to 1.16313 on 12 June — a pip being the fourth decimal place, the smallest step most people count in. Over the next five days it fell 185 pips to 1.14459. Then the rise resumed, to a new high of 1.18295 on 1 July. The five falling days are the pullback: a step down inside a climb.

How deep

A pullback is measured against the leg it interrupts, not in pips alone. The leg ran from 1.1065 to 1.16313, 566 pips. The pullback gave back 185 of them, which is a third of the leg. Said that way, a pullback on the euro and a pullback on gold can be set side by side — a third of the move, half of it, a quarter — whatever the size of the pips on each chart.

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