A pullback is a pause or moderate drop in a stock or commodities pricing chart from recent peaks that occur within a continuing uptrend. ... The term pullback is usually applied to pricing drops that are relatively short in duration - for example, a few consecutive sessions - before the uptrend resumes.

What is considered a pullback?

As its name suggests, a pullback is a stock's short-term move in the opposite direction of the longer-term trend—which can offer an opportunity to join an uptrend at a relatively advantageous price (see chart “Anatomy of a pullback trade,” below).

How do you identify a pullback?

A pullback is when price temporarily moves against the underlying trend. In an uptrend, a pullback would be a move a lower. In a downtrend, a pullback would be a move higher. According to the works of Adam Grimes, trading pullbacks have a statistical edge in the markets as proven here.