What It Means and How It Works
While the financial media often speaks of how the market will react to certain news, “reaction” has a specific meaning in finance and investing. It’s a quick, typically brief fluctuation in a stock’s price. These shifts can occur in either direction—up or down—and are triggered by new information or events relevant to the stock or its industry.
Technical analysts use the term “reaction” to describe a downward price movement following an upward trend. While reactions are notable, they are generally less intense and shorter in duration than corrections or reversals.
Key Takeaways
- A reaction is a brief movement in price, often in response to news or the release of new data.
- A reaction may only last a few sessions before reverting…
