DOW THEORY DAY 5

The Dow theory is a financial theory that says the market is in an upward trend if one of its averages advances above a previous important high and is accompanied or followed by a similar advance in the other average. Line charts are used for Dow theory. The minimum look-up period should be 2 months and the duration of trend forecasting can be 2 months. When the price is creating a sequence of HB-HT on the break of previous Top after an HB, the trend is bullish & one can initiate a Buy order. Sell: When the price is creating a sequence of LT-LB on the break of the previous Bottom, the trend is bearish & one can initiate a Sell order. The trend lasts for as long as the sequence remains intact. Support occurs where a downtrend is expected to pause due to a concentration of demand. Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.