Dow theory is the older theory introduced by Dow. This will be done in daily line chart. If we are targeting for one – four month gap, this will be useful. This is based on the basic demand and supply. This can be compared with Army and terrorist example. Where if the fight happens, and more terrorist are killed by army, then the army continues to move until further terrorist are identified – Buy. And we all know at the previous place where we have started, We will have more support from Army – SL. If we still go back, we dont know how far army will go down.
The same applies for sell order also