5. Dead Cat Bounce Pattern, Chart

 

 

 

◆ What is the Death Cat Bounce Pattern?

 

 

The pattern represents a short-term rebound in the midst of a downtrend in the price of a particular asset class. This is a pattern derived from the humorous metaphor that even a dead cat can bounce off the ground if it falls. This appears to be a trend rebound by rebounding in the short term, but after a long time, it appears to return to the original trend again.

 

 

 

 

 

 

 

◆ What does the death cat bounce pattern mean?

 

1. This pattern usually occurs when a certain section declines and a short-term rebound occurs. A short-term rebound is a pattern that occurs when traders or investors close short positions or buy when they believe they have reached the bottom.

 

2. Many analysts predict a rebound based on technical or fundamental considerations. However, we may experience that the market always moves against our thoughts. In March 2009, Professor Rovinini claimed that this was a death cat bounce when the Lehman crisis broke out and rebounded, but at that point the market hit a trough and ran 10 years toward a new high.

 

 

3. This pattern is named to explain the phenomenon in hindsight, so even great investors have different opinions about when the bottom is when actually investing.