According to the Dow Framework, one can predict a bullish / bearish trend By identifying the following. First identify the major tops and bottoms. Then identify the Higher Tops (HT) and Higher Bottoms (HB), Lower Tops (LT) and Lower Bottoms (LB). HB followed by HT are for Bullish trends and LT followed by LB for Bearish trends. Go short here. Both with significant volume. Go long on bullish and short on bearish.
Broadly, you buy when Demand > Supply.
You sell when Supply > Demand.
Key – Higher Tops (HT) and Higher Bottoms (HB), Lower Tops (LT) and Lower Bottoms (LB). Important to note that ‘No divergence between the index and sector, and the stock.
HB – HT sequence with high volume are for Bullish trends – Go long after stock crosses previous HT
LT followed by LB for Bearish trends – Go short here after stock dips from previous LB
Support – The price level below which a stock has difficulty falling because of strong support from buyers.
Resistance – The price level above which a stock has difficulty going up due to resistance from the sellers at that level
