Dow theory day 5

Dow Theory is invented by Charles H Dow in 19th Century. Since the all the parameters of the company is not available for fundamental analysis, DOW introduced this theory to study the market to understand the market trend. The theory is based on demand and supply, which can be identified using Price and Volume. Dow Theory gives the direction of the market movement whether its bullish or bearish.we need data of minimum 2 years. In line (daily) chart, we should mark the tops and bottoms. If the sequence is formed with Higher bottom and Higher Top with significant volume it is a Bullish trend. If the sequence is formed with Lower bottom and Lower Top with significant volume it is a Bearish trend. Dow theory cannot be used for daily trading such as Intra day trading as it cannot reveal any information about price movement at once. Normally it is useful for long term purpose only. Dow theory shows us the market trend in easy way so that it is remains on top of any analysis. Support and resistance analysed in terms of demand and supply or Sellers zone and Buyers zone. The place where the price increases with demand is support and the place where the price decreases with supply is resistance.