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What is Rebound Meaning? What Causes a Market to Rebound?
Seth Rowden Nov 14, 2024
What is Rebound Meaning? When something changes direction and moves higher after a period of decline, it is called a rebound. Let's take a closer look.>>Claim Your Free $100 Gift!
What is Rebound Meaning?
In finance and economics, a rebound refers to a recovery from a past time of unfavorable activity or losses, as in the case of a business reporting excellent profits following a year of losses or launching a successful product line following a string of unsuccessful launches.
A rebound in the context of stocks or other securities means a price increase from a lower point.
A rebound for the overall economy means an increase in economic activity from lower levels, such as the recovery from a downturn.
What Causes a Market to Rebound?
Several factors can cause markets to rebound. In oversold conditions, where rising prices are supported by the fundamentals, a sharp decrease may occur. Investors may then decide to buy rather than sell out of fear as a result of this. Also, increase as the economy turns around from a recession. Higher overall demand and business growth suggest bigger earnings and higher stock values.
In the short term, a rebound can be caused by more technical factors, but these tend to be short-lived. For instance, a dead cat bounce can happen when short positions are covered or when technical traders believe the bottom has been hit when it hasn't. In the end, the dead cat bounce is not supported by fundamentals, and the market quickly resumes its downturn.