Definition of 'Relief Rally'
There are a number of factors that can contribute to a relief rally. For example, a relief rally may occur after a period of negative news or events that have caused the price of the security or asset to decline. If investors believe that the negative news or events are over, they may start to buy the security or asset again, which can cause the price to rise.
Relief rallies can also occur after a period of high volatility. When the price of a security or asset is volatile, it can be difficult for investors to determine the true value of the security or asset. A relief rally may occur when investors start to believe that the volatility is over and that the price of the security or asset is starting to stabilize.
Relief rallies are often short-lived. This is because investors are typically quick to sell the security or asset once they believe that the price has reached a point where it is no longer undervalued. As a result, relief rallies can often be followed by a period of further decline.
Despite their short-lived nature, relief rallies can be an important indicator of investor sentiment. When investors are willing to buy a security or asset after a period of decline, it can be a sign that they are becoming more optimistic about the future value of the security or asset. This can be an important factor to consider when making investment decisions.
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