Dead Cat Bounce is the name of a phenomenon in Technical Analysis
When I was learning to trade forex in the beginning, my trainer mentioned ‘dead cat bounce’ during class one day. It was the first time I heard such a term. I thought that it was invented by the her because it sounds so weird.
After class, I googled the Internet and Voila! There really was a chart pattern named Dead Cat Bounce after all! OMG, it was real!!
What is a Dead Cat Bounce?
So what exactly is this oddly named pattern and what are its implication and uses?
A Dead Cat Bounce is a trend continuation pattern and basically means a reversal chart pattern has failed, usually the ‘Head & Shoulders pattern (amazingly another wonderfully named phenomenon that traders are familiar with).
Binni wrote an article on this last year ‘Dead Cat Bounce – Chart Pattern with an Elliott Wave Twist‘.
Now, a dead cat bounce in forex means a failed head and shoulders pattern. Once a dead cat bounce happens, buyers can quickly join in whereas sellers will have to close their shorts. It is easy to recognise and is a chart pattern that has a high probability outcome.
Dead cat bounce describes price rallying and making a ‘Head and Shoulders’ pattern invalid
Come and learn many other chart patterns
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Last time, many things that I wanted were just dreams, now I see them as possibilities. I'm looking forward to own pent-house suite in Manhattan overlooking Central Park because forex trading with Tflow® makes it possible. Find me on Google+