Quick answer: A bull market is a sustained rise in price, conventionally marked at a 20% gain from a recent low. A bear market is the mirror image — a 20% fall from a recent high, with a drop of 10–20% classed as a correction instead. Both labels come from the equity market and travel awkwardly into forex, because a currency pair is a ratio: a bearish EUR/USD is by definition a bullish USD/EUR. In FX the useful question is not “is the market bullish?” but “which side of this pair is strengthening, and against what.”
Traders use “bullish” and “bearish” more loosely than any other pair of words in the business. A trader can be bullish on a five-minute chart while the weekly trend is falling apart, and both statements can be accurate. The confusion costs money when a trader borrows a definition from one market and applies it to another without checking whether it transfers.
This guide covers what each term means, the historical numbers behind them, why forex resists a market-wide bull or bear label, and the specific chart evidence that tells you which regime you are trading.
What a Bull Market Is
A bull market is a prolonged period of rising prices, usually defined as a 20% or greater advance from a recent low, accompanied by broad participation and improving confidence. The 20% figure is a market convention, not a rule set by any regulator, so different data providers date the same bull market differently.
Duration matters more than the percentage. A 20% rally that unwinds in three weeks was a bounce; a 20% advance that holds for months and keeps making higher highs is a trend. What defines the state is the structure underneath — a sequence of higher highs and higher lows, with pullbacks that stop short of the previous low.
Bull markets tend to run alongside falling unemployment, expanding output and easier credit. Sentiment follows rather than leads: by the time the label reaches headlines, a substantial part of the move is behind you.
What a Bear Market Is
A bear market is the inverse — a decline of 20% or more from a recent high, sustained over weeks or months rather than days. A fall of 10% to 20% is a correction, and anything shallower is ordinary volatility. The distinction sounds academic until you size a position around it.
Bear markets are faster and more violent than bull markets. Selling clusters: margin calls force liquidation, liquidity thins, and spreads widen exactly when traders most want out. The largest single-day gains also occur inside them — Hartford Funds, drawing on Ned Davis Research data as of March 2025, reports that about 42% of the S&P 500’s strongest days over the previous 20 years landed during bear markets. Sharp up-days are a feature of downtrends, not evidence that one has ended.
The two terms have been paired for three centuries. “Bear” came first, from an 18th-century proverb about selling the bearskin before catching the bear — a warning about short selling that produced London’s “bearskin jobber”. Alexander Pope pinned the bull opposite it in verse in 1720.
How Long Bull and Bear Markets Actually Last
Equity market history gives a base rate worth knowing, even for traders who never touch stocks. Using Ned Davis Research figures published by Hartford Funds (data as of March 31, 2025):
| Measure | Bull markets | Bear markets |
|---|---|---|
| Count since 1928 | 28 | 27 |
| Average duration | ~988 days (2.7 years) | ~289 days (9.6 months) |
| Average move | +112% | −35.2% |
| Share of the last ~95 years | ~78% of the time | ~22% of the time |
Bear markets occur roughly every 3.5 years on that long-run average, though the spacing has widened since the Second World War to around one every 5.1 years.
The asymmetry is the point: markets spend most of their time rising slowly and fall quickly. An average is not a schedule, though — several bear markets have run far longer than 9.6 months, and past performance does not guarantee future results. These figures also describe US equities, not currencies.
Why Forex Has No Market-Wide Bull or Bear
Currencies are quoted in pairs, so there is no such thing as a bullish forex market. Every price is a ratio between two economies, and a fall in one is arithmetically a rise in the other. Selling EUR/USD is buying dollars with euros. The 20% rule, built for an index that can rise or fall as a whole, has no equivalent object in FX.
That does not make the vocabulary useless — it relocates it. In forex, “bullish” and “bearish” describe one instrument’s trend, or one currency’s strength across the board, rather than a market-wide state.
The closest thing to an FX-wide reading is the US Dollar Index (DXY), which measures the dollar against a fixed basket of six currencies dominated by the euro. A rising DXY generally means broad dollar strength — usually with EUR/USD, GBP/USD and AUD/USD falling together. Traders read the same way across crosses: a yen rising against the dollar, the euro and the pound at once is yen strength, not a view on any single pair.
We ran the equity 20% test across the majors to see how often it would even trigger, using widely quoted daily extremes from the 2021–2022 dollar cycle (levels rounded; exact highs and lows vary by liquidity provider):
| Pair | Peak → trough | Move |
|---|---|---|
| GBP/USD | 1.4250 (Jun 2021) → 1.0350 (Sep 2022) | −27.4% |
| AUD/USD | 0.8007 (Feb 2021) → 0.6170 (Oct 2022) | −22.9% |
| EUR/USD | 1.2349 (Jan 2021) → 0.9536 (Sep 2022) | −22.8% |
| USD/JPY | 102.59 (Jan 2021) → 161.95 (Jul 2024) | +57.9% |
Those moves cleared the 20% threshold — but took 18 to 42 months to do it, in an unusually large dollar cycle. Most FX trends never travel that far. A pair can trend cleanly for six months and move 7%: a decisive downtrend by any practical standard, and nowhere near a “bear market” by the equity definition. The stock market’s threshold, applied to currencies, sets a bar that clears about once a decade.
How to Identify Which Market You Are In
Read structure first, indicators second. Price making higher highs and higher lows is bullish; lower highs and lower lows is bearish; neither is a range, which is where most instruments sit most of the time.
The practical checklist:
- Swing structure. Mark the last three swing highs and lows on a daily chart. The direction of that sequence is your trend, and it is the only evidence here that does not lag.
- The 200-period moving average. Price persistently above a rising 200-day MA is a conventional bullish filter; below a falling one, bearish. Slow by design.
- Momentum confirmation. A MACD crossover above the zero line supports a bullish read; below it, bearish. Momentum confirms structure, it does not override it.
- Higher-timeframe alignment. A bullish four-hour chart inside a bearish daily chart is a countertrend trade. Name the timeframe every time you use the word.
- Volatility behaviour. A trend producing wider daily ranges is changing character, whether or not it has changed direction.
One caution from the platform itself: MetaTrader carries no breadth indicator — no advance/decline equivalent, checked in MT5’s indicator list in September 2026 — so the equity trader’s habit of confirming a bull market with participation data does not transfer to FX. Currency strength meters and the DXY are the nearest substitutes, and both are inferences rather than measurements.
What Drives the Shift From One to the Other
Regime changes in currencies are driven by relative expectations, not absolute conditions. What moves a pair is the difference between two central banks’ expected paths, and — critically — how that difference compares with what was already priced.
The recurring drivers:
- Interest rate differentials. A central bank expected to raise rates faster than its counterpart typically supports its currency. The expectation does the work; the announcement is often where the move ends.
- Growth and inflation data. Payrolls, CPI and PMI releases move pairs by shifting rate expectations — which is why the same number can be bullish one month and irrelevant the next.
- Risk sentiment. Under stress, capital moves toward the dollar, the yen and the franc regardless of local fundamentals, and commodity currencies weaken.
- Positioning. A trend everyone is already positioned for has no fuel left. Crowded trades reverse hardest.
Price confirms the shift, not the narrative. A bearish-to-bullish transition shows up as a failure to make a new low followed by a break above the prior swing high — usually weeks before the reasoning becomes obvious.
Trading a Bull Market vs a Bear Market
The direction changes; the risk framework should not. What changes is calibration.
| Bullish conditions | Bearish conditions | |
|---|---|---|
| Typical approach | Buy pullbacks to support | Sell rallies into resistance |
| Pace of the move | Slower, more persistent | Faster, more violent |
| Volatility | Usually lower | Usually higher |
| Stop placement | Below the last higher low | Above the last lower high |
| Position size | Standard | Reduced — same distance in pips, larger gaps |
| Main failure mode | Buying extended into the trend | Selling into a bear market rally |
Two points do most of the work. First, currencies let you go either way at equal cost — no borrow, no uptick rule, no short-selling restriction. A downtrend is not an obstacle in FX, only a direction. Second, wider ranges mean smaller positions: holding a fixed stop distance while volatility doubles quietly doubles risk per trade, and that is the common route to an outsized drawdown in a falling market.
Trading involves risk of loss in both regimes. A bullish trend does not make a long position safe, and a correctly identified downtrend can still take out your stop before it resumes.
Where Traders Get This Wrong
Treating a bear market rally as a reversal. Countertrend bounces inside downtrends are frequent and sharp — that 42% statistic exists for a reason. A rally is a reversal only once it breaks the prior swing high.
Confusing sentiment with trend. “Bullish on the euro” is an opinion. “EUR/USD is making higher highs on the daily” is an observation. Only the second can be falsified by the chart.
Skipping the timeframe. The word is meaningless without one. Always attach it: bullish on the four-hour, bearish on the weekly.
Trying to call the turn. Catching the exact top or bottom pays once and costs repeatedly. Entering after structure confirms gives up part of the move and avoids most of the losing attempts.
Importing the 20% rule into FX. As the table above shows, currency pairs rarely reach that threshold. Judge FX trends by structure and duration, not by an equity market’s convention.
Bull and Bear Markets — FAQ
What is a bull market?
A bull market is a sustained period of rising prices, conventionally defined as a gain of 20% or more from a recent low. It is characterised by higher highs and higher lows, broad participation, and improving economic conditions. The 20% figure is a market convention rather than an official rule.
What is a bear market?
A bear market is a fall of 20% or more from a recent high, sustained over weeks or months. A decline of 10–20% is called a correction. Bear markets are typically shorter and more volatile than bull markets, with sharp countertrend rallies inside them.
What is the difference between bullish and bearish?
Bullish means expecting or observing rising prices; bearish means expecting or observing falling prices. Bullish traders look to buy, bearish traders to sell. In forex both are always true at once, because a bearish view on EUR/USD is a bullish view on the dollar against the euro.
Can a forex market be bullish or bearish overall?
Not in the way an equity index can. Every currency pair is a ratio, so one side falling means the other is rising. Traders describe a single pair’s trend, or one currency’s strength across several pairs, using the US Dollar Index as the closest market-wide proxy.
How long does a bear market last?
For US equities since 1928, the average is about 289 days — roughly 9.6 months — with an average decline near 35%, per Ned Davis Research data published by Hartford Funds as of March 2025. Individual bear markets have run considerably longer, and averages do not predict any specific case.
How do I know if a market is bullish or bearish?
Check swing structure on a daily chart: higher highs and higher lows is bullish, lower highs and lower lows is bearish. Confirm with a 200-period moving average and a momentum indicator, and state the timeframe you are describing. Structure leads; indicators confirm.
Can you make money in a bear market?
Both directions are tradable in forex at equal cost — there is no borrowing requirement or short-selling restriction. Falling markets are more volatile, which means wider stops and smaller positions for the same risk. Trading involves risk of loss regardless of direction.
What is a bear market rally?
A sharp rise inside an ongoing downtrend that does not reverse it. These bounces are common and can be large — a substantial share of the strongest single-day gains occur during bear markets. A downtrend ends only when price breaks and holds above a prior swing high.
The Takeaway
Bull and bear are useful shorthand and a poor substitute for reading a chart. In equities the labels carry a defined threshold and a long historical record; in forex they describe the trend of one instrument, on one timeframe, against one counter currency. Establish structure first, name the timeframe, then apply the label — and size for the volatility the regime actually delivers.
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Risk disclosure. This article is published for informational and educational purposes and is not financial advice, investment advice, or a recommendation to trade any instrument, currency pair or strategy. Trading forex and CFDs carries a high risk of loss and is not suitable for every investor; you may lose more than your initial deposit unless Negative Balance Protection applies. Past performance does not guarantee future results, and historical market statistics describe past periods only. Market data cited here is self-reported by the sources named and dated where given; exchange rate highs and lows differ between liquidity providers and should be verified against your own platform. Review the full terms and conditions and the relevant risk disclosure before opening an account or placing a trade. FXPrimus is a trading name of entities regulated in multiple jurisdictions; the entity you contract with, and the protections that apply, depend on your country of residence.