The stock market fluctuates from up and down and no
one can predict the nature of the stock market. This can give a bad surprise
for the investors but some of those people make use of this situation as an
advantage to earn the profit. In this case to help the investors cycle analysis stock market
will be performed and this one of the repetitive cycles that occur. These
cycles are predominantly driven by investors to get success in the trade field.
Generally, these stock market cycles are classified
into four phases;
• Expansion
phase
• Peak
or markup phase
• Contraction
or distribution phase
• Trough
or markdown phase
Peak or markup phase
When there is high competition for the products
sometimes the buying pressure may reach the highest point and marks this
creates the transition to the contraction stages, in this case, most of the
investors don’t want to buy any assets due to a high price.
Expansion phase
The expansion phase refers to the process of
expansion that occurs as the result of economic growth and they tend to get
increased when the investors plan to buy something. But if the economy is
properly managed it can last for more than a year. The Cycle analysis forex
trading can help you to know about those phases effectively.
Contraction or distribution phase
This is the distribution phase of the cycle and
this is the weakening of the market. It starts with a peak and ends up at the
trough. And this phase is generally called the market recession by economists.
Trough or markdown phase
This is the point due to where the market sunk to
their lowest possible point and it starts to transition to the expansion phase.
During this phase, the sentiment market cycles get varies in-between the
investors and customers.
Final words
These are the four important phases that are
involved in the breakdown of the stock market and you can make use of this
article to grab the knowledge on the relevant topic.
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