A downtrend is a gradual reduction in the price or value of a stock or commodity, or the activity of a financial market.

Price action typically swings up and down during any given time frame, so a downtrend is a series of lower swing highs (peaks) and lower swing lows (valleys).

The life cycle of a trend is typically three to four swings (highs/lows) in duration. It

help the technical analyst determine how and when to buy or sell short, as well as how and when to sell or buy to cover existing positions.