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A downtrend is in place when a market is making lower highs and lower lows. Once established, only sell positions are to be taken.

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A downtrend (also known as a bear trend) is identified by a series of rallies where each rally exceeds the lowest point of the previous rally decline. The incline between rallies ends below the highest point of the previous decline. A series of successive lower highs and lower low are shown on the above image..

The start of an uptrend for example, is signalled when the price makes a higher low followed by a rally above the previous high (peak). Below is an example of a bullish trend in action, the turning point, higher highs, lows and reversal.


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