A bear market is in which the values of assets in a prominent market index have fallen by at least 20% over some time. This is not a short term drop as you would observe during a correction when prices fall by 10% to 20%. A bear market is a pattern in which investors are bearish about prospects for the future of capital markets or parts of capital markets.

Bearish refers to a market condition where prices are expected to fall. When traders are bearish, they believe an asset’s value will decline due to weak economic data, poor company performance, or negative market sentiment. In a bearish trend, price charts show lower highs and lower lows, indicating consistent selling pressure. Investors may respond by selling holdings, avoiding new long positions, or opening short trades to profit from declining prices. Bearish markets are often driven by fear and uncertainty, leading to reduced demand and increased supply. Understanding bearish signals helps traders manage risk and adjust strategies. Recognising these conditions early allows investors to protect capital and potentially benefit from downward price movements.