Our retracement or Reversal may be many who don’t know what retracement is as well as I am personally very confused when I first learned about Fibonacci retracement actually what the concept looks like.
Okay, then let’s discuss one by one what is a retracement and what is reversal so we also know the difference.
Retracement is a temporary price movement and this movement occurs in the main trend due to market correction. For more details, please refer to the area that has been given a blue color, the price has been corrected and again moves in line with the main trend.
Reversal is a price movement that is opposite to the direction of the previous trend, for example the main trend is an uptrend, so when a reversal occurs, the movement becomes downtrend and vice versa.
Then what should we do when we meet conditions like this that clearly we have to remember the potential loss, and our main goal is to get profit.
If we are not sure that this is a retracement and the price will continue to continue the trend, please do a cut loss to get a profit, but if you believe this is a retracement, then please hold and can also apply a trailing stop.
The point is, please implement risk management, of course this is the best way to reduce losses because a long retracement can turn out to be a reversal.