Guide to Pullback & Continuation SetupsPullbacks are very common phenomena in PRICE ACTION trading which has following 4 phases
1. Breakout from resistance area or breakdown from support.
2. Moves in breakout/breakdown direction.
3. Reversal move where previous support/resistance reverse its role.
4. Move continuation.
In the chart example of MRF, yellow trend line acted as support zone where stock took multiple support.
Phase 1 : On 22-Nov'21, it gave a breakdown from this support trend line resulting in initiation of short trade.
Phase 2 : MRF continued its downward journey from 77000 level to 69000 level giving a great move of more than 10%.
Phase 3 : Post this downfall, it reversed and retraced back untill it hit previous support trend line which acted as resistance to it. This is characteristic of Support & Resistance where previous support reverse its role & act as resistance.
Phase 4 : After taking resistance from previous support, MRF continued its down journey from 77400 to 68200 till Friday.
Bullish example of Pullback & Continuation
Idea
Federal Bank
RIIL
Have you encountered Pullback & Continuation? Share your setups & identify 4 phases in the charts
Hope this article help in learning.
Thanks
Piyush Gupta
Learn & Earn
