A dead cat bounce refers to a short, temporary increase in the price of an asset that is otherwise in decline.

The term "dead cat bounce" describes a fleeting recovery in the price of a falling asset, which is soon followed by a resumption of the downward trend.

This expression is derived from the saying, "Even a dead cat will bounce if it falls from a great height."

Originating on Wall Street, the term is commonly used to refer to instances where a minor rebound occurs during a significant downturn.

In technical analysis, a "dead cat bounce" is recognized as a price continuation pattern.

In the early phases of a Dead Cat Bounce pattern, it may be mistaken for a trend reversal.

The pattern starts with a decline, followed by a notable price retracement.

However, after a period, the price ceases to rise, and the downward trend resumes, breaking through previous support levels and establishing new lows.

Consequently, Dead Cat Bounce patterns can lead to what is known as a bull trap, where traders initiate long positions in anticipation of a trend reversal that ultimately does not occur.

The earliest recorded use of the term appears in an article by Chris Sherwell in The Financial Times on December 7, 1985: "Despite the evidence of buying interest yesterday, they said the rise was partly technical and cautioned against concluding that the recent falls in the market were at an end. This is what we call a ‘dead cat bounce‘, one broker said flatly."