in this section i have learnt about the dow theory the formation of high top and bottom and the supply and resistance and the duration of the pattern
- : The Dow theory on stock price movement is a form of technical analysis invented by charles dow who used top and bottom to detrmine the rise and fall of the market
- : The chart used here in dow theory is line chart and minimum look period of the chart is 2years and the duration of trend forecasting is minimum 2 months
- : the market trend determined in dow theory is by using the top and bottom of the line chart . the trend is calculated by the high top and high bottom when the market is in bullish pattern and low top and low bottom when the market is in bearish pattern
- : Dow theory provides only directional indication and only for the longer duration(2 Months) and does not indicate the shorter reflections in the market. But this theory is top of analysis, since it is proven for many years and good for deriving the trend easily.
- : we have to buy when there is a high top and high bottom and the long to be placed only when the price to become above the previous bottom . we have to sell the share when there is a formation of low top and low bottom .but it takes nearly two monts to form the trend
- : in support the number of buyers increase and the share price goes up and in resistance there is large number of sellers which makes to the price decrease