What is a downtrend in trading?
When the price of anor a decreases steadily over a period of time, it is said that the price is in an downtrend. The opposite of a downtrend is an . If the price is developing rather flatly, it is called a .
Even if theis clearly down, there will still be fluctuations in price. Thus, a general downtrend will also incorporate temporary increases in price.
This means that when the price of an asset moves in a particular direction, it does not move in a straight line. There may be small peaks and troughs: highs and lows within the trend. A downtrend can therefore be identified by continuously lower highs and lower lows.
The chart below is an example of price in an downtrend:
number_1 Lower lows
number_2 Lower highs
Manyare based on . One example is our forex beginner strategy:
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