Retracement is a temporary reversal in trend of an asset's price, before returning back to the previous trend.

For example, over a period of time say the price of BTC rises from $6000 to $7000. If the price drops back down to say $6500, before further going up to $7500, the drop to $6500 would be referred to as a retracement.

If the price were instead to keep dropping past $6500 to $6000 or below, then instead it would be referred to as a reversal — a hard switch from a trend in one direction to a trend in the other direction.

A popular tool for measuring and predicting retracement levels are Fibbonacci Retracements. Adding these indicators to charts is incredibly eery as prices tend to hang out around these lines. Some claim there is some mathematical voodoo behind their importance, but it's also likely hat enough people believe in these levels that it becomes a self-fulfilling prophecy.