Collapse is large and sharp in the total value of the market
and this is the reason of this collapse :
Either a hug rise in market value, this height produced investment exit from market at the period of profit taking.
Sometimes this exit causes to increase the fear of market so other investors starts random and sudden exit and sale large amount of stocks, bonds, currencies. …etc. At random way and in low price.
For example, what happened to the Crypto Currency and Bitcoin at November 2017, where the market rose in less than a month 7 times fold it’s previous value.
Directly after this hug rise and in less than month market lost more than 60% of it’s value, where the investors began to exit at the period of profit taking, soon the things changed and the market start to collapse significantly. This decline followed by stagnation and decline into lower levels until this day 31 of December 2018.
- The country is exposure to natural disasters and this causes collapse in County’s financial markets.
- The country exposure to wars causes collapse.
- General country economic decline significantly causing collapse.
- The occurrence of political problems at the external and internal level of the country causing collapse.
The corrections occurs when the market tries to return into its normal or equilibrium status by going back to its previous prices With stability for certain period, and this after the price reached a high level And often is a new level.
In order to differentiate between collapse and corrections, the corrections must be reversed from the track and the movement often is negative and it’s should not be less than 10-15% of the market value and market loses within 20% and this is called corrections.
Corrections types by technical analysis :
- Simple correction
- Complex corrections