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  Declining Trend  
     
       
   
 

A declining trend is an downward zigzag of price movement that results when the bears are in control. We define the trend, as well as postulate future price movement, by drawing a line across the declining tops. To further clarify the boundaries of the price activity, we can also draw a line, which is parallel to the declining tops line, across the declining bottoms. This forms the trend channel, which allows us to set targets for future tops and bottoms in the trend by estimating where the price index will intercept the top and bottom of the channel. A declining trend is not "official" until there is a top below a top and a bottom below a bottom.

In this chart we can see a fairly well-defined declining trend channel. Also, within the channel we can see shorter-term declining trend lines. When the declining trend line is violated (the price index crosses up through the line), we consider the trend to have ended.

 
   
       
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