Legal Definitions - technical adjustment

A technical adjustment refers to a temporary, short-lived reversal or deviation from the prevailing, long-term trend in the price or value of an asset or market. It is a minor fluctuation that goes against the larger, established direction, often driven by short-term trading dynamics rather than fundamental changes in the underlying value or economic conditions.

• Example 1: Stock Market Fluctuation
  Imagine a technology company's stock has been steadily increasing in value for six consecutive months, reflecting strong earnings and market confidence. One week, the stock experiences a slight dip, falling by 2% for two days, before resuming its upward climb and continuing its overall growth trend.

  This brief 2% decline is a technical adjustment. It's a temporary counter-movement against the established, long-term upward trend of the stock, likely driven by short-term profit-taking or minor market jitters rather than a fundamental change in the company's prospects.

• Example 2: Commodity Prices
  Consider the price of gold, which has been consistently falling for several weeks due to a strengthening global economy and reduced demand for safe-haven assets. Suddenly, for a few days, the price of gold experiences a modest increase before continuing its overall downward trajectory.

  The short-term increase in gold's price, despite the sustained decline, is a technical adjustment. It represents a brief pause or counter-trend movement within the larger downward trend, possibly due to short-term buying interest or market corrections.

• Example 3: Currency Exchange Rates
  Suppose the Japanese Yen has been steadily weakening against the US Dollar for several months, driven by differing interest rate policies between the two countries. However, over a three-day period, the Yen experiences a small, temporary strengthening against the Dollar before resuming its overall depreciation.

  This brief period of strengthening for the Yen is a technical adjustment. It's a short-term movement against the dominant trend of the Yen's depreciation, often influenced by short-term trading strategies or minor news events that don't alter the fundamental economic drivers.