How to Spot a Downtrend (Without Overcomplicating It)
Markets don’t always go up. When things start slipping, here’s how to tell if it’s just a dip or the start of a real downtrend:
1. The Obvious Pattern
Price keeps making lower highs and lower lows? That’s the most basic sign of a downtrend. No fancy indicators needed.
2. Failed Comebacks
Small rallies that get rejected near key levels (like Fibonacci retracements) often mean sellers are still in charge.
3. Broken Supports
If price slices through levels that used to hold it up, that’s bad news. The next support might be much lower.
4. The Slide Channel
When price keeps bouncing between two downward-sloping lines, that’s a downtrend’s favorite playground.
5. Trap Bounces
After a sharp drop, a weak rebound (a "bear flag") can signal another leg down is coming.
6. Volume Tells the Story
Big red candles with heavy volume? That’s sellers going all-in.
7. The Moving Average Test
If price keeps struggling below the 50 or 200 MA, the trend isn’t your friend.
8. The Death Cross
When the 50 MA crosses below the 200 MA, even long-term holders start sweating.
9. The Wave Count
Downtrends often play out in five messy waves—sharp drops followed by weak corrections.
Why This Matters
Spotting these early helps you avoid buying dead bounces or stay out of trades that are going nowhere. No crystal ball needed—just price doing what it always does.
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