Bullish and Bearish Markets

The words bull and bear, when it comes to the stock market, come up a lot. Bullish or bearish markets are listed again and again in reports. Of course, to be effective in forex trading, one must be familiar with market conditions. This often requires the right actions (trading) of a bull and a bear market.

With that in mind, this guide discusses what the difference in the stock market is between the bull and the bear and how you can profitably invest your capital by using the stages to your benefit. Two of the most relevant forex words are bullish and bearish. There are other words, however, that you certainly should know before you get into currency trading.

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Bull & Bear Description

For increasing or declining values, the bull and the bear are metaphorical. Since the bull strikes from the bottom up with his horns, he is the emblem of rising prices. One speaks of a bullish market in this sense, often called a bull market. Often referred to as bulls are investors expect prices to increase.

The bear is the opposite. Anyone anticipating prices to fall is called a bear. In its paws from top to bottom, the bear strikes and thus reflects dropping prices. Also known as a bear market is a bearish market. About the entire economy, the terms bull and bear are often used but may also describe markets, regions, or areas such as individual raw materials.

When rates rise or fall for a long period, we talk of a bull or bear market. In such processes, however, it is common for price developments to be subject repeatedly to smaller counter-movements, the so-called corrections. These stages are, however, considerably lower than the actual market pattern.

The accelerated period of the bull market is often reflected especially, i.e. when prices are that more strongly than average. One talks of a rally in such a situation. An extended period of sharply rising prices, called a prolonged period of falling price crashes, would boom.

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Forex Trading

Meanwhile, for currency trading, there is always a special case, as currencies are still exchanged as pairs. For instance, if the EUR/USD currency pair has a bearish trend, this means that the euro depreciates against the US dollar. This goes hand in hand with the US dollar rising, so there is a bullish trend here. In comparison to other financial items, foreign exchange patterns can also occur in both directions, depending on which currency is the base currency and which is the quote currency.

Incidentally, the Bull and Bear symbols stand near major stock exchanges as statues and are well-known tourist attractions. In Frankfurt, on the forecourt, the Bull and the Bear face each other. In the financial district of Manhattan, the world-famous "Charging Bull" by Arturo di Modica can also be found. Furthermore, in Amsterdam and Shanghai, bulls by the same artist were also set up.

Phase Recognition / Technical Analysis

To find out whether it is a bullish or bearish pattern, technical analysis may be used. For market participants to be able to make the correct trading choices, this is very critical. Also, beginners can discover these currency rate patterns and draw from them the right conclusions.

You can take advantage of both points. It is not only possible to make money from rising prices on the stock market, but also to benefit from a bearish period. For currency exchange, this often applies.

In the table, different time intervals can be shown. You are looking at a very long-term period if you want to notice a pattern. Various periods are beneficial here, depending on which trading version you use. If you want to invest your money in the long term, i.e. over days or weeks, you are looking at a period that is correspondingly longer than if you use shorter trading periods. The last few hours are appropriate in such a situation.

For the long term, if a market is going up, it's a bullish price, so you should go long. You can go "short" accordingly with a bearish price . . In the meantime the corrections that occur will make a trader question whether the pattern is sufficiently stable. It is very hard to break a current long-term pattern, however. Of course, however, the corrections can escalate and lead to a reversal of the trend. In the opposite direction of the trend, you can also trade and take advantage of the corrections.

Analytical Means

You have to deal with the technical examination to be able to understand the course of the course correctly if you have not already done so. Trends can be more readily detected and assumptions made about future trends thanks to the tools of technical analysis. Well-known supports, for example, include:

• The Moving Averages

• The Relative Strength Index (RSI)

• The Bollinger Bands

There are hundreds, also known as technical indicators, of these methods. You must familiarize yourself with how and indicator you intend to use functions before using them.

You have a different set of these tools, depending on which forex broker or which trading program you use. You should not believe the technical indicators blindly, however. Basing your trading decisions on multiple bases is often important.

In addition to the indicators, it is possible to see recurrent trends in price growth. These are known as patterns of chart or formations of the chart and occur in the form of formations of trend confirmation and formations of a trend reversal:

Trend confirmation information	Trend reversal formations
Flags	Shoulder-head-shoulder formation (SKS)
pennant	Rounding top/bottom
Descending, ascending, symmetrical triangles	Double top/bottom
	V formations

 

Table: In the summary, trend symbols

There are only a few examples of trends in the chart to help with research. As you can see, to correctly identify the patterns, an in-depth examination of the topic of technical analysis is required. You can only make lucrative trading choices then.

It is best to assess whether you can correctly interpret the charts and extract profitable trade from them in a demo account. Knowing bullish and bearish patterns is the first step - the next steps on the road to becoming a good trader are patience and practice.

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