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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]
[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.
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]
The frustrating truth about technical analysis is that it requires interpretation. Ideally, a chart would shout "buy" or "sell" and could only be interpreted one way. But as the saying goes, "If ...
Backwardation indicates the futures curve is falling, with spot markets and short-term futures contracts priced higher than longer-dated contracts.
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 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.
Very bearish sentiment is usually followed by the market going up more than normal, and vice versa. [3] A bull market refers to a sustained period of either realized or expected price rises, [4] whereas a bear market is used to describe when an index or stock has fallen 20% or more from a recent high for a sustained length of time. [5]