Dead Cat Bounce
trading · financial markets
A dead cat bounce is a brief price rebound during a larger downtrend that later fails and resumes the decline.
A dead cat bounce is a short-lived recovery inside a broader bear trend. It becomes clear only in hindsight, after the rebound fails to form a durable reversal and price makes lower highs or lower lows.
Traders watch for weak volume, rejection at former support, poor market breadth, and negative news or liquidity conditions that remain unresolved. No single indicator proves a bounce is false; the risk is mistaking relief buying for renewed demand.
The phrase is a warning about confirmation bias, not a prediction tool. Buying solely because an asset has already fallen can be risky when leverage, unlocks, hacks, or broader market stress are still pressuring sellers.
Related terms
Bear Market
→A sustained market decline accompanied by broadly negative sentiment and reduced risk appetite.
market · trading
Dump
→A dump is a rapid wave of selling that pushes an asset's price lower, often driven by panic, profit-taking, or manipulation.
trading · strategy · market manipulation · market psychology