Bull and Bear Market Explained

Bull and Bear Market Explained

The Bull and Bear Market: these are two of the common terms you’ll encounter when trading. These symbolisms are very vital in chart reading as they act as market indicators. Let’s say if a market is considered to be bullish – then a buy would be advised. If it is otherwise bearish, a sell would be advised.

A widespread myth as to how the “bull market” and “bear market” emerged are from the instinctive approach of each animal. A bear would attack by swiping their paws downward while a bull would naturally nudges its head upwards when doing so.

In a rather more obvious explanation, these two representations can be easily understood if you know their natural behaviors. A bull, as its usual behavior, will always thrust its head up. In the market, this symbolizes the upsurges in a certain market, stock or forex pair. A bear on the other hand will always have its head face down and thus giving the term bearish to any declining market.

Bull and bear market trends can also act as buy and sell signals. To cite an example, let’s say USD/JPY is currently having a bullish trend. It would be highly recommended that you as a trader would take this opportunity to buy it. Once it starts to weaken, then you can opt to sell. The same can be recommended on a bearish market – you start to sell once it gets heavily dominated by bears.

Read also: Factors To Consider In Forex Movements Prediction

The Bull Market

The bull market as mentioned above is the type of market where trades are surging. With such, the market gains confidence. It can root from good economic data and optimistic market news as these are some major factors that affect the market. Any long term and progressive market sentiments can maintain a market’s bullish trend. However, this can lead to it being overvalued.

A bull market can also be overvalued once it continues any rises. It can act as a signal that it may go down soon as no market could cater an overflowing amount of investments.

The Bear Market

The Bear Market is basically the complete opposite of the Bull Market. Any market which faces major declines can be considered bearish. Of course, these are rooted from any poor market sentiments or economic confidence which again, affects any stock, forex pair or any market generally.

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