Prices falling, month on month:the bear swipes down, the mood is blunt.
A market characterised by sustained falling prices and pessimistic sentiment.
In forex, a bear market for a currency means it is losing value against other currencies.
In plain words
A bear market is a long period in which prices keep falling and most participants expect further falls. In share markets a fall of 20% or more from a recent high is a common rule of thumb for the label. Currencies are priced against each other, so a bear market in one currency is a bull market in the currency on the other side of the pair.
See it move
Candle 6 of 6: closed below where it opened
Why it matters
The label describes the backdrop a trader is working in: rallies tend to be shorter than declines and sentiment is cautious. It describes what has happened so far and says nothing certain about what comes next.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
An invented share index peaks at 5,000 and later stands at 3,900.
- 1Fall = 5,000 − 3,900 = 1,100 points
- 21,100 ÷ 5,000 = 0.22 = 22%
- 322% is beyond the 20% rule of thumb
By the common convention this decline would be called a bear market.
A common mistake
A bear market does not mean prices fall every day. Sharp rallies occur inside long declines, and the trend is judged over months, not sessions.
Check yourself
Educational information, not investment advice or a recommendation to trade.