A bullish market is one where prices continue to increase over an extended period of time, with buyers largely in the driver’s seat. I’ve seen this many times in Forex and gold when demand was robust and the news indicated positive growth.
You see more buyers than sellers, and everyone is anticipating rising prices. To traders such as ourselves, a bullish market allows accounts to be grown through consistent, low risk trades.
Here’s what fuels these trends and how you can identify them.
A true bull market is characterized by consistently rising asset prices occurring simultaneously with a well-functioning economy. Instead you see more trades, more hope, and a hell of a lot of bull market steady gains. I like to talk about these times because they allow us to punch above our weight with strategic risk and intentionality.
Bull markets typically only present themselves after the fact, once prices have increased by 20% or more from the market’s trough. This can sometimes last for months or years. It did so from 2003-2007—S&P 500 rose and maintained the trajectory until it turned.
Nonetheless, even short declines of 10% or more can still occur.
The real measure is in stock prices going up. They shouldn’t just jump up once in a while—in other words, we want to see an upward trend over years. I load the boat on longer-term moves, not fast swings.
When prices consistently continue to rise, it’s indicative of strong buyer confidence in the market. This consistent upward climb tends to attract more investment, reinforcing the trend in the process.
To spot a real bull market, look for strong prices that increase consistently over a long time frame. It’s no good for them to just increase for a week or two.
When this takes place, investors believe the bull market is real. So instead they continue to hold on to their trades—or even double down. The more time that goes by without a correction, the more people want to get in on the action.
Bull markets feed on optimism. Positive news, booming jobs reports and optimistic front pages drive investors to buy.
As the positive stories accumulate, the more investors start to participate, feeding the trend and further extending the bull market.
Often characterized by low jobless rates, solid GDP growth, and a generally stable economy. When people have jobs they feel secure and they spend more and companies earn more and that’s what keeps the market healthy.
When the economic backdrop is favorable, people are more comfortable investing their money.
As corporations announce larger earnings, it catches the attention of investors. In general, positive earnings result in an increase in stock prices and an increase in investor confidence in the market.
Politically, the dynamic works the same way—firms reinvest, fueling new growth.
Bullish runs typically lead to increased trading activity. You’ll notice increased trading activity as institutional investors and retail investors are both involved.
This much activity is enough to cause prices to fluctuate wildly, but it displays a bullish demand.
Every spike in price isn’t a bull market. The important element is an increase that endures, rather than a flash in the pan.
Close monitoring of underlying trends—more than just clickbait headlines—is what distinguishes genuine bull markets from short-lived rallies.
Spotting a bullish market early allows you to get in ahead and ride the wave before the majority realizes what’s happening. On my own trading, I rely on tested-and-true indicators—never just intuition. I’m looking for consistent, low-risk returns, which is why I look for signals that are verifiable and back-testable.
It’s not about making the big score, it’s about stacking the deck in your favor and avoiding the big losses.
Using Technical Analysis Signals Technical analysis is crucial to gauging the market’s sentiment. I stick with simple tools that work: RSI, MACD, and the advance/decline line. If the RSI continues to remain above 50, it provides an indication that buyers have control.
Likewise, when the MACD line crosses above its signal, that’s another bullish sign for buyers. Bullish patterns such as double bottoms or cup-and-handle formations on charts can alert you in advance of the market. I primarily use these to identify momentum shifts and lay the foundation for trades made with minimal risk.
Moving averages are a good indicator of a market’s heartbeat. When the 50-day crosses above the 200-day, that’s a textbook bullish signal. This is a tricky indicator, as I actually prefer to see them both trending up rather than just crossing once.
Crossovers show when sentiment changes direction. When the advance/decline line is indicating a greater number of stocks advancing versus declining, you have a true trend.
Breakouts represent the beginning of new moves. I would watch for flags, triangles or resistance levels breaking out on big volume. If prices do break out on high volume, buyers mean business.
Not enough volume to support a bullish market? It’s not a threat. Identifying Price Breakout Patterns These patterns are really useful for me to time my bullish trades and avoid false starts.
Monitoring Market Volume Changes Volume is an important indicator that confirms price moves. When prices go up on increasing volume, that’s true strength. This is one way I monitor volume spikes to identify when the smart money is making their move.
When I see low volume I get nervous, even when all signs point to prices climbing.
So market health is extremely important. For one, I look for robust GDP growth, strong earnings and low unemployment. If companies keep beating earnings expectations, that’s a good sign.
Second, as the economy adds jobs it provides assurance that the market’s upward run is stemming from real expansion. Sometimes it’s simply tax cuts or new technology (cloud, mobile) that can provide the jet fuel for a strong run.
Earnings season can be a huge deal. When companies continue to beat forecasts, prices tend to soar. Positive surprises attract new buyers, and consistent earnings growth is a reason for them to stay.
When I read an earnings report, I read the guidance, not just the headline news.
Market sentiment dictates every move the market makes. I look to sentiment surveys and indices to find out if investors are bullish. When everyone is bullish, that’s what can keep it bullish.
I’m perpetually on the lookout for indicators of over-the-top bullishness.
A bull market is always fueled by equal parts good economics, good policy and good ol’ human optimism. In the course of documenting these major bull markets, I’ve learned what truly fuels these long uptrends. The narrative always starts with good stats, pointing to strong fundamentals, low volatility, and clear historical indicators.
You can’t avoid it, though, because you see it in every strong market from Forex to gold. A bull market isn’t chance. It’s a streak of over 20% growth, driven by more than technical price charts.
Bull markets thrive on booming economies. A rise in GDP, strong employment figures and modest inflation combine to assert confidence among consumers. Take the macroeconomic picture – when U.S. GDP is up and inflation is low, speculators recognize real opportunities to double down.
This rise in consumer confidence increases consumer spending, which further increases company profits, which further drives up stock prices and gold prices. When the macro conditions are positive, investors flood in to take part.
Government fiscal policies—spending increases and tax cuts—inject more cash into the system. When the next round of stimulus checks or national infrastructure plan hit the news, markets react. Fiscal stimulus, as seen in the recovery of 2008–2009, pushed markets to new highs.
Regulatory changes are another way that markets are affected. Straightforward, pro-business regulations can attract more traders, but unexpected regulatory shifts can send them running for the exits. Trust in the system and proactive policy goes a long way to building public confidence in the system.
Low rates translate into low cost credit. This allows companies and households to take on higher levels of debt, boosting consumption and investment. Since bonds are providing lower yields, it’s making stocks and gold more attractive.
A bull market does not run forever.
In other words, innovation provides markets their life’s blood. Creating new tech powers the collective excitement. Tech booms, such as the 2010s, increase profits and create new winners.
From trading bots to fintech, I’ve experienced how these new tools democratize access to all traders. These transitions open up new avenues for development.
Markets are powered by mood as much as math. When sentiment is positive, more people rush to buy. Social proof—if the Joneses are getting rich, why can’t you?—fuels further optimism.
This positive feedback loop of optimism and buying continues to propel prices higher, attracting even more buyers.
No market is an island on to itself. Rapid economic growth in Asia or Europe increases demand in those regions and in the U.S. Trade and investment flows connect us all.
One boom becomes the catalyst for a run in another area—a testament to how global economic trends can influence local bull markets.
Bull markets provide a favorable environment in which we all have an excellent opportunity to build our accounts with less blood, sweat and tears. In these runs, we find trends of consecutive price appreciation, increasing strong fundamentals, and general positive sentiment euphoria. To win here, you need to do more than cross your fingers or roll the dice.
My approach is focused on strategies that reduce downside risk. These tactical approaches are based on concrete facts and are designed to appeal to novice and seasoned traders. Here are some smarter strategies to profit from a bull market without diving in headfirst.
Buy and hold only flies in a bull market. When prices go up, being in buy and hold allows you to take advantage of that increase. In my opinion, this is the best way to avoid overcomplicating the process.
One, it saves you on fees since you won’t be making a lot of trades. You purchase, hold and essentially let the market take care of things for you over the course of several months or years. Patience is the order of the day, though. If you hold through these dips, you receive the full gain of the market’s advance.
Bull markets average three to five years in duration. This buy and hold strategy allows you to accumulate stable profits with no anxiety.
I prefer to increase positions gradually. One way to reduce that risk is to increase your positions over time. As prices hit your predetermined targets, you can systematically increase your position as the trend begins to establish itself.
Let’s say gold breaks an important level of support/resistance, or a particular Forex pair continues to make higher highs. I increase positions only when a setup is apparent—not simply because prices are rising. That way, you don’t fall into the trap of buying in too deep, too quick.
Retracements in bull markets are goldmines for favorable entries. Retracement levels are what I actively seek—so, for example, 38% or 50% on a chart—retracement levels are areas where buying makes sense.
This allows you to make sure you’re not buying at the absolute peak. Technical tools, including support zones and moving averages, assist me in locating these areas. By buying during temporary dips, I snagged lower prices while positioning myself for bigger profits when the market regains strength and continues on its upward path.
The long-term opportunity Bull runs produce a lot of volatile short-term swings. This is why I tend to use swing trading to catch these moves, often holding trades for days or weeks.
This requires sharp charts and quick thinking, but it can spell out immediate victory. Technical analysis is my primary approach—price action, candlesticks, and momentum. Swing trades increase your potential returns, but require you to monitor the market after hours and be prepared to act quickly.
My Take: Stay Disciplined Always It doesn’t matter what the market is doing—discipline is critical. Chasing hype or trading on gut feels will only get you burned.
I have very hard and fast rules about risk, entries, and exits—and I don’t deviate from my plan. A written plan ensures you stay focused when the market gets crazy. Discipline is what protects your profits and saves you from the big, expensive mistakes.
Bull and bear markets are not empty jargon. These terms determine how all of us trade, invest, and plan for our economic futures. Knowing the difference puts us light years ahead of the competition in the markets. This better understanding is extremely important if you, like me, aspire for low, consistent returns with low drawdowns.
In my experience, understanding the swing between optimism and caution is key, especially for those of us focusing on core pairs like Forex and Gold, or scaling funded accounts without taking wild risks.
Bull markets are simple, at least on the surface—prices just continue to go up. That’s when you’ll see stocks, gold, or other key currency pairs like USDCAD soaring for months or years on end. Indeed, since 1942, bull runs have lasted an average of 4.2 years, going up an average of 180%.
Oppositely, bear markets are precipitous declines—typically at least 20% from peak—and typically last less than a year. These bull and bear phases force investors to adapt to new conditions. Where bull markets lure buyers and risk-takers, bear markets leave everyone itching to sell or at least sit on the sidelines.
I think the smartest move for all of us is to be flexible and adjust. In a bull run, I play it safe using tried and true setups with low risk. In bear markets, I go looking for places I can park in safety or look for shorts. Being able to spot these shifts early can be the difference between being able to continue to grow your account versus suffering significant losses.
When the markets are going up, optimism reigns supreme. Investors begin chasing performance and lose sight of risk. During a bear phase, fear takes over. Most take losses too quickly or don’t trade at all.
Through all of this, I’ve learned that controlling emotion is just as big a factor as choosing the right trade. Seeing these swings allows me—and you—to take more measured, stable action.
Bull markets create a virtuous cycle of spending and investment. On the positive side, businesses are hiring plenty, and consumers are confident. In bear markets it’s the opposite—consumers (and companies) spend less, hiring freezes and capital markets tighten.
These boom and bust cycles affect all sectors of the economy too, from investment banks to day traders. If we follow these changes, we can start to make better, more informed decisions, regardless of whether we’re growing, shrinking, or somewhere in-between.
Bull markets are fast and thrive on genuine optimism. I watch them ignite when people get optimistic, purchase equities, and inflate valuations. I look for uptrend higher highs and heavy trade volume – those indicators don’t deceive. In the U.S., you find these bull runs in everything from stocks to gold to even Forex pairs. Whether riding a bull market or not, I have hard and fast rules, cut risk, and allow winners to run. You’ll never see me chase hype or wild swings. I use hard data and plain talk to help you spot these runs, so you can grab gains and dodge big drops. Speculation is what you want to avoid – you want steady steps. Have any further questions or are interested in trading with a plan? Get in touch today and let’s create your next success story together.