What is Downtrend?
A downtrend is a decline in an asset price that shows an overall downward price movement. In a downward trend, the price experiences lower lows and lower highs. Hence, the next peak is lower compared to the previous. Short-term investors and traders might consider closing their long position at the start of a downtrend. Depending on the investment strategy, some investors might open a short position at the beginning of a downtrend and close the position when they detect a potential trend reversal.