Dow Theory helps identify the market trend by looking at price movements rather than all the parameter that are required for fundamental analysis.
*When Demand > Supply – Bullish trend
One can buy a stock when the price crosses the previous Higher top in this trend
*When Supply > Demand – Bearish trend
A short position is created when the price falls below the previous lower bottom in
this trend.
The Dow theory does not hold good for intraday and short term trading as we cannot catch the swing and price reversals.
