Dow Theory

Dow theory is used to determine supply and demands. Minimum time is 6months – 2years. Line chart is used to determine the pattern of dow theory. Top and bottom are marked first. Dow theory explains only demand and supply and states to follow the market Where as it does not determine the price movement.When the shares moves up above the higher top we can start buying the shares, and the shares should be sold before the stop loss. If the stocks move down to the opposite side, we need to sell the shares.These events are horizontal trendlines which cause a stock’s direction to reverse. When prices are falling, support represents the moment when buying overwhelms selling and prices reverse. Conversely, when stocks are moving higher, resistance is the point where selling overwhelms buying and the price increases stop. Which lead stock market to trigger and closes the market soon.