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Trends & Market Structure

What Is a Downtrend

A downtrend is a stretch where every time the price bounces back up it stops lower than it stopped the last time, so the ceiling keeps falling. This paper shows you one drawn from the euro's fall from September 2024 to January 2025, the idea as a leaf falling in the wind, the falling ceiling on the daily chart, forty days of the fall one candle each, and how to colour the up days and down days apart on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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The fall

A downtrend is a stretch where every time the price bounces back up, it stops lower than it stopped the last time. The euro against the dollar went from 1.12136 on 25 September 2024 to 1.01771 on 13 January 2025, 1,037 pips lower — a pip being the fourth decimal place, the smallest step most people count in. Along the way it bounced up three times, to 1.09368, 1.06294 and 1.0458, and each of those highs is lower than the one before it. Join them and you have the falling ceiling. The falling ceiling is the downtrend.

A leaf falling in the wind

The picture is a leaf falling in the wind. Every gust lifts it a little, and every lift ends lower than the lift before it, so it comes down. The lifts are not the opposite of the fall; they are part of it. What makes the afternoon a downtrend is not that the leaf never rose. It is that each time it did, it stopped lower than the last time.

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