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I have read several technical articles as to what constitutes a pullback on a daily chart. They include various opinions:
A) 3-5 black candlesticks ( Close<Open)
3-5 Lower Highs
C) 3-5 Lower Lows
D) 3-5 Lower Closes
D) A combo of the above
I struggle with which criteria to enter into my advanced scans. Comments as to what is the true indicator of a daily pullback ?
Individual stock behaviors are highly variable, so no one definition is going to fit all circumstances. When a stock is trading in a narrow range, 3-5 of anything will not look like a pull back. On the other hand, unexpected bad news may cause a one day drop that would qualify in points as a pullback, but then recover before 3-5 of anything occurs.
There are other ways to capture a pullback as well, using overlays and indicators. You could test for a short term MA - maybe 3 to 5 days - turning down. You could use Fast or Slow Stochastics crossing under 20 after being above 80 in the last 10 days - experiment with the parameters to see what works best. You could look for a low crossing below a short term price channel - maybe 7 or 10 days. And so on.