FOREX.com by StoneX logo

Downtrend definition

Downtrend

Price action consisting of lower lows and lower highs.

Technical analysts will attempt to identify a downtrend because they’re more significant than a temporary decline in price. Downtrends are usually spurred on by changes in the valuation of an asset, whether that’s as a result of macroeconomic factors, technical indicators reaching key levels, negative news, or disappointing company earnings. These can have a lasting impact on the market price.

While most traditional trading takes place within an uptrend, you can go short on market prices with derivatives, enabling you to take advantage of downtrends.

Search the Glossary

Look up the meaning of hundreds of trading terms in our comprehensive glossary.

It's your world. Trade it.