Pullbacks and Throwbacks

Most often used in breakout strategies, pullbacks and throwbacks allow traders to confirm a breakout in a certain direction without sacrificing a good entry price to do so. The trade-off is that if a pullback or throwback does not occur and the breakout continues then the trader might miss out entirely.

A pullback occurs in a downtrend the price breaks through a support level and then retraces to that former support level (now resistance). A common trading strategy is to then enter short at or near that resistance level as many traders who missed out on the breakout now want to enter short.

A throwback is similar to a pullback but occurs in an uptrend after break of resistance.

Trading tip: the stronger a support or resistance level is (which usually correlates with higher timeframe charts) the more significant a breakout is. Very strong levels might have lots of stops behind then and produce a strong short squeeze or long squeeze situation. In those cases a pullback or throwback or is still possible but might take more time to develop. It is always best to wait for a sustained break of important levels to avoid false breakouts.

Join the Discussion!

  1. Profile photo of Imran
    Imran
    May 14, 2010 at 23:17Reply

    very good example and lesson.
    keep it up :)

  2. ssss
    June 17, 2010 at 09:07Reply

    goog keep it up

  3. Lordsbe
    July 16, 2010 at 13:51Reply

    Thanx for the strategy lesson that analyses the above charts , never knew about false breakouts that it can be deceitful. iwill review more of your analysis.great work!

  4. Profile photo of thyclinic
    thyclinic
    September 6, 2010 at 21:58Reply

    Excellent explain.

  5. Profile photo of johnamirtharaj
    johnamirtharaj
    September 25, 2010 at 15:28Reply

    thanks for great example.

  6. Fred
    March 14, 2011 at 11:32Reply

    I find that reading the advise provided more than once, helps one to stay on track. Thanks for the value information.

    • Alessandro
      July 18, 2012 at 15:32Reply

      started our hot 12 wins in a row, what was weird about last nite (robot or human) is it bought and sold made prfiots both ways like scalping. He or It got in way to early and shorted this euro like horny teenager on his gf for the first time. its gonna retrace to 61.8 or 50% area and than drop to 150. this sucker sold it way too soon

  7. chiadikobi jp
    March 15, 2011 at 13:14Reply

    Thanks,this is insightful

    • Suzuki
      July 20, 2012 at 05:46Reply

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