I just realized that many traders are fooled by the dead cat bounce pattern. This is one of the most common traps in the market, especially during bearish conditions.

So here’s the thing, dead cat bounce is basically a small rebound in price after a sharp fall. The name is unique—it's said that even a dead cat will bounce if it falls from a height. Haha.

But here’s the important part: that rebound doesn’t mean the market will recover. It often becomes a trap for those still optimistic. Usually, the price drops drastically first due to negative news or market pressure. After that, there’s a small technical reaction that makes traders think “oh, it’s starting to turn around.” But that’s not necessarily the case.

What often happens is the price rises again about 50% from the previous decline—that’s called a retracement. But this retracement is just a pause. After that, the price continues to fall again, even deeper. Dead cat bounce confirmed.

Therefore, it’s very important not to be tempted by this rebound. Many traders enter long positions and keep losing because they think the dead cat bounce is a true recovery. In reality, the market is still in a strong bearish condition.

My tip: if you see a sudden rebound after a sharp decline, don’t get excited right away. Check the fundamentals and long-term trend first. Dead cat bounce is a warning sign, not a signal to buy. Stay cautious and don’t fall into this trap.