## Price Correction via Throwback and Pullback ─ Strategies Used by Professional Chart Analysts

Beginner traders often get confused by price movements that pull back from the main trend. The problem is they cannot distinguish whether this correction is a **Throwback and Pullback** (a temporary rebound) or a Reversal (a true reversal). Misinterpreting this can lead to losses or missed profit opportunities.

## What are Throwback and Pullback ─ Basic Differences

**Pullback** occurs in a downtrend; the price temporarily bounces up but cannot break the previous resistance level. It then drops again to form a new lower low (Lower Low) following the downtrend.

**Throwback** occurs in an uptrend; the price temporarily pulls back but cannot break the previous support level. It then moves back up to create a new higher high (Higher High) following the uptrend.

The cause of Pullback and Throwback relates to market psychology. As the price continues in one direction, early position holders start to close profits. This creates a correction in the price, but since it’s just some traders taking profits, not a trend reversal, it does not change the overall trend. When the correction is sufficient, new buyers step in, pushing the price back into the original trend.

## Why are Pullback and Throwback favorite entry points for traders

The follow-buy entry approach (buy on dips) often leads to buying at higher prices. Conversely, waiting for Throwback or Pullback allows for better entry prices, with clear stop-loss points (below the previous high/low) and a much better risk-reward ratio.

## Differences between Pullback/Throwback and Reversal ─ Must be clearly distinguished

The main reason traders fail with Pullback and Throwback strategies is confusing them with Reversal patterns.

**Key differences:: the test of support/resistance**
- **Pullback/Throwback**: Price corrects but does not break the support/resistance level.
- **Reversal**: Price breaks through support/resistance, especially if it’s a long-standing level.

**Second indicator: Trading volume (Volume)**
- **Pullback/Throwback**: Low volume, temporary correction.
- **Reversal**: High volume, confirming a true change in trend.

**Third indicator: Testing**
- **Pullback/Throwback**: Testing the level and bouncing back.
- **Reversal**: Multiple attempts to break the level with accumulated volume.

## 4 Practical Strategies for Trading Pullback and Throwback

### 1. Trading at Breakout Points ─ The clearest and earliest entry

When the price breaks support/resistance, it indicates a clear trend. Usually followed by Pullback and Throwback to test the previous level.

**Method:**
- Wait for a breakout.
- Don’t enter immediately; wait for the price to bounce back and test the level (Pullback/Throwback).
- Enter when the price tests the level.
- Set stop-loss at the lowest point of the original breakout candle.
- Exit when the price shows signs of weakening or reversal.

### 2. Ladder Strategy ─ Suitable for clear trends

In strong trends, the price doesn’t move straight up or down but in steps. During Throwback, it won’t break the previous low (Higher Low), and during Pullback, it won’t surpass the previous high (Lower High).

**Method:**
- Identify the main trend.
- In an uptrend: use the previous low as support; buy on Throwback testing this level.
- In a downtrend: use the previous high as resistance; sell on Pullback testing this level.
- Set stop-loss when the price breaks the support/resistance level.

### 3. Using Trendlines (Trendline) and Moving Averages ─ Classic tools

Draw trendlines through contact points of highs/lows or use Moving Averages as trend indicators. In an uptrend, the trendline acts as support; in a downtrend, as resistance.

**Method:**
- Draw clear trendlines or apply MA (such as 50 or 200).
- Wait for Pullback/Throwback to test the trendline or MA.
- Enter when the price bounces off the trendline.
- Set stop-loss if the price breaks through the trendline.

### 4. Fibonacci Retracement ─ Identifying correction targets

In strong trends, Pullback/Throwback usually does not exceed 23.6%, 38.2%, or 50% of the initial move.

**Method:**
- Draw Fibonacci from the start point to the peak (uptrend) or from high to low (downtrend).
- In an uptrend: levels 23.6%, 38.2%, 50% serve as support for Throwback.
- In a downtrend: levels 23.6%, 38.2%, 50% serve as resistance for Pullback.
- Divide your position into 3 parts at these levels and implement risk management.

## Important: How to distinguish Pullback/Throwback from a true Reversal

The trader’s responsibility is to observe whether:
1. **Price breaks the previous support/resistance level** ─ If yes, it’s a Reversal.
2. **Trading volume increases** ─ If yes, there’s a risk of Reversal.
3. **Strength of the prior trend** ─ Is the previous trend strong or already weakening?

## Summary

**Pullback and Throwback** are temporary price rebounds within the main trend, not actual reversals. When correctly identified and understood, they become excellent entry points with favorable Risk-Reward ratios. Combining multiple techniques such as Breakout, Trendline, Fibonacci, and Volume analysis greatly enhances accuracy and reduces misinterpretation.