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The opposite market condition to normal backwardation is known as contango. Contango refers to "negative basis" where the future price is trading above the expected spot price. [3] Note: In industry parlance backwardation may refer to the situation that futures prices are below the current spot price. [4]
On the technical analysis chart, the head and shoulders formation occurs when a market trend is in the process of reversal either from a bullish or bearish trend; a characteristic pattern takes shape and is recognized as reversal formation. [1]
[2] [3] On the other side of the trade, hedgers (commodity producers and commodity holders) are happy to sell futures contracts and accept the higher-than-expected returns. A contango market is also known as a normal market or carrying-cost market. The opposite market condition to contango is known as backwardation.
Backwardation indicates the futures curve is falling, with spot markets and short-term futures contracts priced higher than longer-dated contracts.
As with investors and stocks, a market can also be bullish or bearish. A bull market is generally defined as a period of consistent, overall upticks in the market, whereas a bear market is defined ...
A bear market is essentially the opposite of a bull market, meaning that it is a prolonged period of declining prices. A bear market generally occurs when prices have declined by at least 20 ...
The call backspread (reverse call ratio spread) is a bullish strategy in options trading whereby the options trader writes a number of call options and buys more call options of the same underlying stock and expiration date but at a higher strike price. It is an unlimited profit, limited risk strategy that is used when the trader thinks that ...
The pole is formed by a line which represents the primary trend in the market. The pattern, which could be bullish or bearish, is seen as the market potentially just taking a "breather" after a big move before continuing its primary trend. [3] [4] The chart below illustrates a bull flag. A bear flag would trend in the opposite direction.