Dow Theory uses trend analysis to reflect all the available information and market price movement. Line chart is used for Dow theory with minimum of two years data. Bullish : Higher Bottom – Higher Top sequence with high volume. BEARISH : Lower Top – Lower Bottom sequence with high volume. CONS : Late recognition of change in trend and Cannot be used for intraday. Support = Buyer Zone and Resistance = Seller Zone.

  • : Dow Theory is the basis of technical analysis of financial markets. It uses trend analysis to determine which way the market is headed. It reflects all available information and the market price movement
  • : Line charts are used for Dow theory. Lookup period must be minimum of 2 years. Duration of trend forecasting is of 2 months.
  • : Line chart with a look back period of minimum 2 years. 1. Identify TOPS and BOTTOMS. 2. Determine HIGH or LOW TOP and HIGH or LOW BOTTOM. Condition for BULLISH: 1.HIgher Bottom - Higher top sequence. 2. High volume. 3. No divergence between the index/sector and stock. Conditions for Bearish: 1. Lower top - Lower Bottom sequence 2. High volume 3. No Divergence between the Index/Sector and stock.
  • : 1. Criticised for giving late recognition of a change in trend. 2. Different trends are not strictly defined. Eg. Secondary trend beginnings often appear like primary trend beginnings. This makes the determination of primary trends often unclear. 3. Too specific about the requirements needed to identify a change in trend. 4. Cannot be used for intraday and short term trader.
  • : LONG : when market makes continuous LT and LB with good volume. SHORT : when market makes continuous HT and HB with good volume. The trend will be reliable for two to three months.
  • : Support and Resistance are specific price points on a chart which are expected to attract maximum amount of either buying or selling. SUPPORT : Support is something that prevents the price from falling further. Support level is always below the current market price SUPPORT = BUYER ZONE. RESISTANCE: Resistance is something which stops the price from rising further. The resistance level is always above the current market price. RESISTANCE = SUPPLIER ZONE.
1 Comment
  1. vignesh 4 years ago

    Hi,
    your work is good.

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