The Dead Cat Bounce Trap — Why a 40% Fallen Stock Can Still FallA stock falls 40%.
Then suddenly...
It starts moving up.
+5%
+10%
+15%
The chart starts looking better.
Retail traders start thinking:
“The fall is over. Reversal has started.”
And this is where the trap can begin.
A sharp bounce after a major decline does not automatically mean the original downtrend is over.
Sometimes it is simply a relief rally inside a larger bearish structure.
Think about this simple sequence:
-50% → +18% → -30%
The stock falls heavily.
Then buyers step
Education
