"The term is commonly used in phrases like, "don't try to catch a falling knife," which can be translated to mean, "wait for the price to bottom out before buying it." A falling knife can quickly rebound - in what's known as a whipsaw—or the security may lose all of its value, as in the case of bankruptcy." (Investopedia)
"A falling knife refers to a sharp drop, but there is no specific magnitude or duration to the drop before it constitutes a falling knife. A falling knife is generally used as a caution not to jump into a stock or other asset during a drop. Traders will trade on a sharp drop, but they generally want to be in a short position and will use technical indicators to time their trades." (Investopedia)
Best,
Dr. Moshkelgosha M.D
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