Lower highs and lower lows
How do traders describe a downtrend in plain terms, and what does that pattern suggest about control?
In plain words
A downtrend is described when each successive peak in price is lower than the last (lower highs) and each successive trough is lower than the last (lower lows). It is a simple description of direction, drawn from the sequence of swing points rather than any single price.
Why it matters
The pattern says which side of the market has been in control: sellers have been willing to accept lower prices, and buyers have not been able to hold previous floors. It describes the path already taken, so it cannot on its own say when the sequence will end.
In a real week: ETH, week of 21 May 2018
For ETH in the week of 21 May 2018, the weekly high of 720.46 came early, at 07:00 UTC on Monday, and the weekly low of 550.0 arrived later, at 09:00 UTC on Thursday. The price then closed the week at 570.40, a fall of 20.35%, in the lower third of the week range, and 50.79% below its 52-week high.
A common mistake
Treating a single lower close as proof of a downtrend. The description needs a sequence of peaks and troughs; one weak week inside a mixed run of prior weeks is not the same pattern.