What is a Bear Market?
Bear Market
Forex Trading Glossary
Quick Answer: A bear market is a sustained downward trend with falling prices, pessimism, and strong selling pressure. Bears believe prices will continue falling and sell aggressively.
What is a Bear Market?
A bear market is a prolonged decline marked by lower lows, defensive sentiment, and capital flight. In currencies it often coincides with slowing growth, widening deficits, or dovish policy expectations.
Key Traits
- Downward trend structure: Lower highs and lower lows dominate the chart.
- Risk aversion: Investors rotate into safe havens like the U.S. dollar, Swiss franc, or Japanese yen.
- Negative macro signals: Weak data and easing biases discourage inflows.
Volatility Risk
Bear markets deliver sharp countertrend rallies. Size positions conservatively and respect stop losses.
Trading Approach
- Concentrate on short setups or pairing weak currencies against strong counterparts.
- Use breakdowns from consolidation patterns to join the move.
- Monitor news for policy shifts that could spark a squeeze higher.
- Lock in profits on flushes; mean reversion bounces can be violent.
Related Terms
Learn More About Forex Trading
Now that you understand bear market, explore our comprehensive guides: