The price chart shows a downward trend when successively lower tops and lower bottoms occur. In spite of their complete opposites, downtrends are similar to uptrends in that if their patterns persist, they will remain intact.

The "downtrend line" is the line connecting two or more tops. For a downtrend line to be drawn, two tops are required. The more tops used to draw that line, however, the more traders feel confident in the downtrend since it reinforces the direction. The downtrend line acts as the “resistance” while the bottoms act as “support”. A typical price trajectory in this context is to rebound and reach even lower levels once it reaches the downtrend line. The downtrend line will be breached when demand exceeds supply.

A downtrend in forex refers to a market condition where the price of a currency pair consistently declines over a period. This is characterized by lower lows and lower highs, indicating a persistent decrease in value. Traders recognize a downtrend by observing chart patterns, trendlines, and technical indicators like moving averages and the Relative Strength Index (RSI). A downtrend typically results from negative economic data, geopolitical instability, or central bank policies that weaken the currency. During a downtrend, traders might adopt strategies like short selling to profit from falling prices. Recognizing and understanding downtrends is crucial for risk management and making informed trading decisions in the forex market.