How to distinguish between technical rebound and trend shift

The Argentinian technical analyst Jorge Fedio has defined technical rebound as a strong rise amidst the bearish trend observed.

Tuesday, July 29, 2008

Strictly speaking, technical rebound is any short term movement opposite to the main trend, whether upward or downward.

When it happens in a downward trend, its objective would be to look for the roof of the figure that is being developed. It happens when the selling momentum is topped by the buying momentum, as the market is attracted by the low prices.

Once the rebound happens, the selling momentum grows again and the prices continue their downward trend.

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