Bearish Momentum

What Is Bearish Momentum?

Bearish momentum occurs when a cryptocurrency’s price continues to decline with strength, driven by consistent selling pressure. It reflects negative market sentiment and often confirms or accelerates a downtrend.

This momentum is usually accompanied by a series of lower highs and lower lows, falling volume on up moves, and confirmation from indicators like RSI, MACD, or moving averages.

Why It Matters in Trading

• Helps traders avoid entering long positions in weak markets
• Provides signals to exit positions early or hedge against losses
• Offers confirmation for short trades and trend continuation setups
• Can indicate an upcoming breakdown of key support levels

Bearish momentum helps define market strength behind downward price action, not just direction alone.

How to Spot Bearish Momentum

RSI (Relative Strength Index)

• RSI falls below 50 and trends lower
• An RSI under 30 suggests extreme bearish pressure

MACD (Moving Average Convergence Divergence)

• Bearish crossover (MACD line falls below signal line)
• Negative histogram bars grow in size

Moving Averages

• Short-term MA (like SMA10) staying below longer-term ones (like SMA50)
• Price remains below both short- and long-term MAs

Price Action

• Red candles dominate
• Failed rallies and strong rejections at resistance levels
• Breakdowns of previous support zones

Example of Bearish Momentum in Action

Suppose Litecoin falls from $100 to $85, attempts to recover to $90 but fails, and drops further to $80. Volume rises on red candles, RSI dips below 40, and MACD confirms with a crossover.

This is a classic example of bearish momentum, where selling pressure increases and the trend continues lower.

Common Signals That Confirm Momentum

• Volume increasing on price drops
• Failed breakouts or fakeouts at resistance
• Bearish candlestick patterns, such as evening stars or engulfing patterns
• Divergence between price and momentum indicators