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Rally definition
A rally is a strong, sustained rise in the price of an instrument or market. It can appear in shares, forex, commodities, indices, and CFDs.
A rally is driven by buying demand outweighing selling, often after strong earnings, supportive economic data, a central bank signal, or short covering. It can build during an existing uptrend or stage a recovery after a fall. Traders watch volume, momentum, and resistance levels to judge whether the move has further to run.
A rally is an upward move, so its opposite is a sell-off, where selling pressure pushes prices down. A rally also differs from a reversal: a rally is the rising move itself, while a reversal is the turning point where a downtrend becomes that rising move. A short, sharp rally inside a broader downtrend is often called a bear market rally.
Rally Example
Gold falls from USD 2,380 to USD 2,320 after strong US data.
The next day, softer inflation data lowers expectations for higher interest rates, and gold climbs back to USD 2,360.
That recovery from USD 2,320 to USD 2,360 is a rally, because the price rose sharply on renewed buying demand.
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