The Trough

A

Technical analysts would purchase a stock if they think that it has hit its trough, and is now in a rising trend channel.

The trough refers to a specific point in a market cycle or a price trend. It is important to understand the meaning of the trough in the context of financial markets. Let's go through each answer choice to determine the correct definition:

A. The bottom price: This answer choice implies that the trough is the lowest price point reached during a market cycle. While it is true that the trough represents a low point, it may not necessarily be the absolute bottom price.

B. A trend indicating declining prices: This answer choice suggests that the trough is associated with a downward trend in prices. However, the trough does not necessarily indicate a declining trend. It is a singular point within a larger trend.

C. A trend indicating rising prices: This answer choice is incorrect. The trough is not associated with a trend indicating rising prices. Instead, it represents a low point within a trend, which can be either rising or falling.

D. A period of low-volume trading: This answer choice is incorrect. The trough does not necessarily represent a period of low-volume trading. It refers to a specific price point rather than trading volume.

E. The peak price: This answer choice is incorrect. The trough is not the peak price. The peak represents the highest point reached during a market cycle, while the trough represents the lowest point.

The correct answer is A. The trough refers to the bottom price point reached during a market cycle. It is the low point within a trend, which can be either rising or falling. However, it is important to note that the trough does not necessarily represent the absolute bottom price, as the market may continue to decline further.