Dow Theory helps in understanding the Demand & Supply in a better way.
Identify the major Tops and major Bottoms.
When we identify a sequence of “Higher Bottom – Higher Top”, along with High Volume, we create a Long Position. So that means the Demand is higher than the Supply and the Price is expected to go up.
When we identify a sequence of Lower Top – Lower Bottom”, along with High Volume, we create a Short Position. So that means the Supply is higher than the Demand and the Price is expected to go down.