Dow theory

The Dow theory was invented by Charles Dow. He was able to do the analysis of market based on the market movement rather than doing the fundamental analysis. This made him to find a pattern that helped him to identify the bullish or bearish behaviour of the market. In dow theory, the market trend should me analyzed for a minimum of 3 months to determine the trend. Dow theory has two conditions to find the trend. One is to find a sequence higher bottom and higher top for a bullish trend and other sequence is lower bottom and lower top for a bearish trend. Both of these conditions should be accompanied by a good volume in the market.