The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation.The line chart with a minimum of two years data is used to forecast the trend for 2 to 3 months.Through chart we have to consider 2 years market and mark the higher tops and higher bottoms as well as lower tops and lower bottoms.
After marking ,we have to watch out for higher top-higher bottom sequence ,in case of buying and lower top-lower bottom for selling.If we find the sequence of Higher bottom and Higher Top, we can buy the stock as the trend is bullish.
Where as if the sequence is formed by Lower top and Lower bottom, we can sell the stock as the trend is bearish.
Higher Top-Higher Bottom sequence———–Buy(Bullish)
Lower Top-Lower Bottom sequence————Sell(Bearish)