Can a dead cat bounce? Technical Analysis explained
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).
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.
Come and learn many other chart patterns
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