Dow theory

This theory is being derived by Charles H Dow. He monitored price and volume mainly to understand market trend. Instead giving importance to fundamental research he started noticing market movement and derive theory to undertake short term position. With this he derive theory as below to enter the position –
following positions need to be observed :
1. higher top – higher bottom – with high volume
2. lower top – lower bottom with high volume
then with this need to enter long position when there is break out from higher top or to undertake short position when there is break down from lower bottom.