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

  • : dow theory is based on the market direction that is demand and supply.
  • : minimum of 2 years is required to use dow theory and line chart is best suited for dow theory analysis
  • : 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
  • : dow theory only provides the market direction.it is an old concept but still used.
  • : 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.
  • : support is where the demand is greater than supply and resistance is where the supply is greater than demand
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