How Can You Tell the Difference between a Retracement and a Reversal

Understanding how price action and how prices trend will help a trader avoid disasters and help them get the most pips out of a trade. The key concept is that of retracements and reversals.
The knowledge to predict the difference between a retracement and a reversal is a great tool to add to your trading arsenal. Many experienced traders are still unable to detect the difference between an assets retracement and a potential reversal. Reversals are temporary changes in a trend that occurs over a short period of time. Whereas retracements are momentary changes that often occur during a longer trend. Unlike reversals, retracements show a continuation of an opposing trend within the targeted price action. Being able to successfully determine whether an asset is displaying a reversal or retracement is vital if you want a high success rate trading portfolio.