Cyclical Retracement

Definition ∞ Cyclical retracement describes a temporary reversal or decline in the price of a digital asset during an ongoing larger market movement. This often represents a natural correction after a period of significant gains, allowing the market to consolidate before potentially resuming its primary direction. It is a common market behavior observed across various financial instruments.
Context ∞ News articles frequently analyze cyclical retracements to distinguish between temporary pullbacks and more significant trend reversals. Traders and analysts use these movements to identify potential entry or exit points, often relying on technical indicators to gauge their extent. Understanding retracements is essential for interpreting short-term market volatility and its implications for long-term price action.