Trends
A downtrend is a pattern that is revealed through technical analysis of a stock which indicates the stock is in a bearish position, with its value consistently falling. A downtrend may only last for short periods of time, such as weeks, or it can last for months and months. One bullish day does not mean the downtrend is finished, but rather the stock may be taking a break before continuing its downward movement.
A downtrend is drawn on a stock's price chart by identifying two or more high points, but the second high point must be lower than the first high point. When a stock is in a downtrend it will establish a pattern of creating lower highs and lower lows. These receding price points, when connected by a straight line, indicates the downward trend line.
Downtrends info by BetterTrades Charts
A downtrend is considered to be confirmed when the price move is accompanied by lower volume, as this shows the desire by the stock's buyers to continue selling the stock. As long as the price of the stock remains below the trend line, the downtrend is considered to be intact. When the price breaks above the downtrend line, it indicates that demand is growing and that a reversal could be at hand.
