A good earnings surprise is a pattern in which a company circulates an earnings announcement. Then the market will interpret it as better than was expected.
The above chart illustrates an example of a good earnings announcement event pattern. The price makes a large price swing when the earnings come in better than anticipated. Prices climbed 7%. Over the next several days, prices retraced its gain and staged a downward breakout, the price closed below the redline. The next day, there was a price recovery and it climbed to a new high. Again, the price rounded over and began back down during the next several weeks, which is common with this event pattern.
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