Updated on March 16, 2023
A downtrend in markets means reduction in the price or value of a stock/security/commodity etc or a general decrease in financial activity of markets. Downtrends have lower peaks and lower troughs or lower highs and lower lows, but overall trend will be downwards. Traders and technical analysts follow price movements or swings during downtrend more closely as stock prices in a downtrend seem to continue trending lower until there is a drastic change in the market sentiment or conditions.
Markets or specific securities do not usually change instantaneously into downtrends, but it a slow or gradual change and part of the overall market slowdown.The opposite of downtrend is an ‘uptrend’, which is marked by a gradual rise in price of stocks or securities and also characterised by a general economic uptick.