TECHNICAL RALLY

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This is a rally in a given security's price within a general declining trend, such a rally may occur because investors/traders are bargain hunting on the security or because analysts have noticed a particular support level at which the security usually rises.

Technical rally can result at various points throughout a chart's pattern. Other common situations where a technical rally may occur include a rounding top, double rounding top or head and shoulders pattern etc.

A technical rally is an opportunity for short-term investors/traders to make a profit, though a technical rally is one that is temporary and it is highly contingent on moment to moment price movements. Based on this, it is important for long-term investors to recognize the difference between a technical rally and a long-term trend that actually reflects a company's fundamental value.

Investdata Academy

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