Explanation of the Bear and Bull markets

For one to be established as a very renowned trader, he/she must most of all have a good knowledge of the environment of the market. This is due to the fact that the state of the market presently will surely decide the strategy for trading used by you. In current markets, as the extensions, retracements and also the trend lines of the Fibonacci are of great assistance, it would be more advisable to work using a different set of tools for trading. To have an important advantage over other of the traders, you should know the ways of pointing out the current markets.

For that reason, you will see here how to point out and know the two renowned markets which are the Bear and the Bull Markets.

Explanation of the Bear and Bull markets

HH- High-High

HL- High-Low

The Differences between the Bear and Bull markets

First, we begin with the bull market which can be known as the market in relations to finances where the values increase after a particular time frame. The phrase “Bull Market” can also, be used in different diversifications like the Commodities Market or even the Foreign Exchange despite the fact that the phrase “bull market” at first was used in describing the increase in the Stock Market Prices. Now, the Bull market is known for the fact that the cost values do not increase so commonly. In actual facts, the cost values would be on a steady fluctuate increasing (HH) and decreasing (HL). The image seen above would give a very good explanation of the Bullish-Market.

Hence, the bear markets mean exactly opposite to the bull market in the sense that the cost values decrease for a particular time frame thereby causing a set of LL and LH. In relations to the Bull Markets, the cost value mustn’t decrease rapidly but rather create different corrections as it decreases. This market now can be known as a bearish one so far the cost valued decreases to establish the LLs, and at the same time do not terminate the former while it is retracing. You can see below in the image, the Bearish-market setting.

Explanation of the Bear and Bull markets

There are quite a reliable number of effective and assisting equipment one can use during trades concerned to bear market or the bull markets too. One of these tools includes a Fibonacci Tool which is used to know the time the market is at its best so as to know the end point of the retracement or the cost value’s extension. Lots of huge players and traders monitor and order the 38.2 or 61.8 Fib Ratios which are at sometimes very self-fulfilling. Another renowned tool that is very technical is the Trend lines which are in the popular markets widely used.

Examples of a bull and bear market

Learning on the identification of the bull and bear markets is better with examples so a good set is down below.

An Average Directional Index (ADX) indicator is usually used to know a popular bull or bear markets. It functions in a way that the value on the indicator ascends when the market is booming way beyond 25 but drops and descends when the market is in a ranging.

Here are the examples which display a diagrammatic bull market where the cost value makes spectacular HHs and HLs and higher than 25 sits the ADX Indicator which is deduced by a rectangle with green color. The bull market’s end is deduced by some blue.

Explanation of the Bear and Bull markets

In the chart below, is a good bear market example on the currency ties of AUD/USD. The cost values bring forth consecutive LLs and LHs which keeps the ADX higher than 25. Immediately the cost value clicks an HH and causes ADX to descend lower than 25, then that downtrend has ended.

Explanation of the Bear and Bull markets

Differentiating between the retracements and the reversals

What is known as the retracement and sometimes called a correction can be defined as a not-long-lasting cost value flow that goes negatively prior to the renowned trend. What they do is to deliver major signals explaining, the bull markets or the bear are still around. In order to pinpoint where the end of a retracement likely can be, a trader usually measures the cost values retracement with the use of Fibonacci Tools.

Clues explaining a new trend have tendencies of making a reversal is shown when there is an HH at a bear-market trade or an LL at a bull’s market.

Conclusion

It takes a very small practice to identify the bull and the bear markets. One should note that as the total trend is still intact, the cost values can still descend with time in a popular market. From the time a certain trend is finalized and if no important market sentiment shift, then it would still go on. Also, one shouldn’t be engaged in a market when the cost value decides to turn around by disrupting the former HL (at the bull’s market time) or LH (at the bear’s market time) till when another current trend has been made.

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