A retracement refers to a temporary price movement against the main direction. It is also known as a pullback or pause before the quotes resume to move in the main direction. Retractions are a normal part of trading, and some traders build their strategies around them. They can be equally used by digital option and CFD traders

During the uptrend, the price may dip for a while, which will allow a trader to place a Higher trade or buy an asset at a better price. When it comes to downtrends, the price may surge a little, providing market participants with selling opportunities. 

To find retracements, traders often use a special tool known as the Fibonacci Retracement. The most common retreatments are at 38.2%, 50% and 61.8%. Retracements can also be found in trend-continuation patterns like flags or pennants.