When market participants see a spectacular crash happening to an asset, they expect that at some point, the asset would bounce, and provide a buying opportunity. However, this is considered as trying to catch a falling knife. This type of trading is seen as dangerous.
There may me more momentum left and the asset will continue to fall. By the time the asset starts recovering, it will be too late, and your
Even if the price reverses, you are likely to see a dead cat bounce. You should be now fast enough to fade this dead cat bounce and utilize it as a selling opportunity. Hence catching a falling knife is not recommended. It is better to wait for the market to settle down and go with sound fundamentals to buy the asset.
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