Fun-ancial ज्ञान: What is Share Market and Cat's Connection? | Jagran Business | share market
Saumya JaiswarPublish Date: 27 Mar, 2023
A dead cat bounce is a brief, transient increase in asset prices after a long period of loss or a bear market, which is followed by the downtrend's continuance. Periods of recovery, or small rallies, in which prices momentarily rise, frequently halt downtrends.
Even a dead cat will bounce if it falls far and quickly enough, which is the basis for the term "dead cat bounce."
What Does a Dead Cat Bounce Tell You?
Technical analysts often employ the price pattern known as a dead cat bounce. It is regarded as a continuation pattern when the bounce initially seems to be going against the current trend but is immediately followed by a continuation of the price decline. After the price falls below its previous low, it turns into a dead cat bounce (and not a reversal).
Frequently, downtrends are broken up by momentary price increases known as short rallies or recovery periods. This may happen as a consequence of traders or investors covering their short positions or as a result of purchases made under the impression that the security has achieved a bottom.