Rally
In the context of financial markets, the term rally is used to describe a rapid and sudden increase in the value of a market index or financial instrument. A rally is usually generated by a significant increase in demand for an asset.
Investor interest can also be influenced by market movers: e.g. the launch of a new product, economic indicators (such as inflation) or the fall of a government. Investor interest can lead a rally to last even several months.
The temporary rise in prices may be followed by a period of stability or by a reversal of the trend. In the latter case, the financial rally can easily turn into a bull trap: a false bullish movement, which does not change the general price trend.
The durability of a financial rally, therefore, depends strictly on the motives behind it.
Financial rallies can be detected using technical and fundamental analysis tools, i.e. by observing price charts and considering micro- or macro-economic factors, such as a company’s balance sheet or a state’s finances.