Pullback vs Reversal: The Essential Difference Every Trader Must Understand

Many people cannot distinguish between these two concepts, resulting in stop loss being triggered and profits not being maintained.

A pullback is like sneezing, a small drop in a bull market or a small rise in a bear market; the trend hasn't changed, it's just giving you an opportunity to get on board. Imagine BTC dropping from 68000 to 65000 during its upward movement; this is a pullback, and the overall direction is still upward.

Reversal is the true change of the situation. From rising to falling, or from falling to rising, this is a complete trend reversal. Identifying a reversal requires looking at signals—such as breaking through key support levels, forming reversal candlestick patterns, and technical indicator divergence.

Core Difference: A pullback is a correction within a trend, while a reversal signifies the end of a trend. Misunderstanding this can lead to significant costs. Therefore, when trading, you must always manage risk and wait for confirmation signals before acting. Don't be scared by the fluctuations in the 5-minute chart and enter and exit frequently.