Impulse and correction in plain words — why a pullback is not a reversal

You can tell them apart by eye. In an impulse the candles are wide, they go one way and barely overlap — price is in a hurry. In a correction the candles are smaller, they overlap each other and shuffle against the move — price is hesitating.

This is where the trading range comes from — the frame between a confirmed high and a confirmed low. It does not appear out of nowhere: its boundaries are the start and the end of an impulse. The impulse drew the leg, the correction showed how far price is willing to come back.

A correction is a pause, not an end

A correction is not a reversal. A move against the leg cancels nothing by itself. Direction is changed only by a break of the boundary. While the boundary holds, a correction is a pause inside the move, not the end of it.

Depth tells you about strength

If a correction takes only a third of the impulse, a strong participant is behind the move: price is simply not allowed to come back deeper. If the pullback takes almost the whole impulse, the move is an ordinary one, and the continuation still has to be earned.

A live example: EURUSD, daily

August 1, 2025 — the start of the impulse at 1.13916. September 17, 2025 — the end of the impulse at 1.19188: a leg of 527 points. November 5, 2025 — the low of the correction at 1.14687: the pullback took 450 points, 85% of the impulse. The low itself stayed intact — the direction held. January 27, 2026 — the move continued above the upper boundary at 1.20826. The pullback here is deep — so the move is an ordinary one.

Understanding impulse and correction is the foundation for reading the trading range. The FocusProfit Trade Model indicator builds ranges from confirmed extremes and shows where an impulse ends and a correction begins.

This is the final lesson of the introductory "In Plain Words" course. The next step is the Learn section with deeper articles on each topic, and the methodology in full.