Two words you will hear every day
Open any market commentary and within a minute someone is bullish or bearish. The usual explanation is how the two animals fight: a bull thrusts its horns up, a bear swipes its paws down.
- A bull market is one in which prices have been rising over time and buyers are in control.
- A bear market is one in which prices have been falling over time and sellers are in control.
The same words describe a view, too. "I'm bullish on gold" means I expect gold to rise; "bearish on the euro" means I expect the euro to fall. A view is an opinion about the future. A bull or bear market is a description of what price has already done.
What a bull market looks like: the uptrend
On a chart, a bull market is an uptrend: price climbs in waves, and every wave ends a little higher than the one before.
- Each peak is higher than the previous peak — higher highs.
- Each dip stops above the previous dip — higher lows.
- The falls along the way are pullbacks: pauses inside the trend, not its end.
What a bear market looks like: the downtrend
A bear market is the mirror image, a downtrend:
- Each peak is lower than the previous one — lower highs.
- Each low breaks below the previous one — lower lows.
- The rises along the way are short-lived rallies that fail below the last peak.
Neither: the sideways market
Much of the time the market is neither bullish nor bearish. Highs and lows form at roughly the same levels and price bounces between a floor and a ceiling. That is a range, or sideways market. Calling a range "bullish" because of one green candle is a very common beginner mistake.
In forex, a pair has two sides
A currency pair is two currencies against each other. When EURUSD rises, the euro is strengthening against the dollar, which is the same move as the dollar weakening against the euro. So a bullish EURUSD chart is a bearish chart for the dollar against the euro; it says nothing about the dollar against the yen or the pound. Before you call a pair bullish, be clear which currency you are talking about.
You can trade in either direction. With CFDs you can buy (go long) if you expect a rise, or sell (go short) if you expect a fall, without owning the underlying asset. A bear market is not a market you are locked out of — but losses are just as possible on a short as on a long.
Stock indices use a rule of thumb
For stock indices you will often hear a numeric definition: a fall of 20% or more from a recent high is called a bear market, and a rise of 20% or more from a recent low a bull market. A fall of at least 10% but less than 20% is usually called a correction. These are conventions, not laws; in forex and gold, traders more often describe trend structure than quote a percentage.
How to read the trend in four steps
Step 1: Zoom out
Open the daily chart of the instrument and look at the last few months, not the last few hours.
Step 2: Mark the swings
Mark the last three or four clear peaks and the last three or four clear dips.
Step 3: Compare them
Higher highs and higher lows: uptrend. Lower highs and lower lows: downtrend. Neither: a range.
Step 4: Confirm on your trading timeframe
Then move down to the timeframe you trade, and prefer trades that go with the bigger trend rather than against it.
A rising or falling moving average can help you see the direction at a glance, but the swings themselves are the definition.
Mistakes beginners make
- Calling a trend from one candle. A trend is a sequence of highs and lows, not a single big move.
- Buying a falling market because it "looks cheap". In a downtrend, cheap can keep getting cheaper.
- Believing a bull market cannot fall. Every uptrend has pullbacks, some of them sharp.
- Forgetting that trends end. When an uptrend makes a lower low, the structure has changed.
Is a bull market a good time to buy?
It tells you prices have been rising, not that they will keep rising. Many traders prefer to buy in an uptrend, usually on a pullback, but the entry, the Stop Loss and the size of the position still decide the result.
Can I make money in a bear market?
It is possible. With CFDs you can sell (go short), and the position gains if the price falls by more than your trading costs, such as the spread. It loses if the price rises, so the same risk rules apply in both directions.
How long does a bull or bear market last?
There is no fixed length. On a daily chart a trend can run for months; on a 15-minute chart, for a few hours. It lasts until its structure breaks.
What is the difference between a correction and a bear market?
A correction is a fall inside a larger uptrend that has not turned the trend; the uptrend may resume afterwards, or the fall may deepen into a bear market, and often you only know which in hindsight. A bear market means the trend itself has turned: lower highs and lower lows have replaced higher ones.
Summary
Bullish means rising and bearish means falling; on a chart they are uptrends (higher highs, higher lows) and downtrends (lower highs, lower lows), and a range is neither. Always name the timeframe, remember that a forex pair is bullish for one currency and bearish for the other, and let the structure — not a single candle — tell you which market you are in. To go deeper, Trend Structure shows how to mark the swings precisely and spot the moment a trend breaks.