Dead Cat Bounce
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.
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