dow theory

dow theory is an important for 2 years research for technical analysis.It is important to note the tops and bottoms.

• What is Dow Theory?: dow theory is based on the market direction that is demand and supply.
• What type of charts used, minimum look up period, duration of trend forecasting for Dow Theory?: minimum of 2 years is required to use dow theory and line chart is best suited for dow theory analysis
• How to determine the market trend using Dow Theory?: identify the tops and bottoms in the chart and compare previous tops and bottoms. if the sequence is higher bottom-higher top it is bullish.if the sequence is lower bottom-lower top it is bearish,high volume is required for both sequence
• What are the major critics against Dow Theory? How come it remains on top of any analysis?: dow theory only provides the market direction.it is an old concept but still used.
• When to buy and sell using Dow Theory? For how long the trend will be reliable?: long position can be taken when the the higher bottom-higher top of the previous sequence is taken off and for short position the previous lower top-lower bottom is taken off.The trend considered to be reliable as long the HB-HT/LT-LB sequence exists.
• What are Support and Resistance?: support is where the demand is greater than supply and resistance is where the supply is greater than demand