When to buy and Sell using Dow Theory?

[Pradeep Nadarajan]

As per dow theory we can create positions based on the below condition:

Long position – Higher bottom followed by higher top with more volume . (Stop loss is the higher bottom).

Short position – Lower top followed by Lower bottom with more volume . (Stop loss is the lower top).

[surendra kumar]

if there is a higher bottom followed by higher top means and if the price the price go above the higher top means we can expect the price to go up so that we can create a long position

if there is lower top followed by lower bottom and if the price goes beyond lower bottom means then we can expect price to go down so that we can able to create a short position

[Ubeidulla]

As per dow theory we can create positions based on the below condition:

Long position – Higher bottom followed by higher top with more volume . (Stop loss is the higher bottom).

Short position – Lower top followed by Lower bottom with more volume . (Stop loss is the lower top).

[Manikandan]

higher top higher bottom – long position

lower top lower bottom – short position

[Deepika Nautiyal]

The Buy Signal based on Dow Theory

A buy signal can develop like this:

1. After the primary downtrend has reached its low trend in the bear market, a secondary uptrend will happen.
2. After that, a certain pullback on some average will have to exceed 3%.
3. This setback should hold higher than the prior lows on both transportation and industrial averages.
4. In the end, a breakout higher than the previous rally high of both averages sends a clear buy signal for the certain bull market.

The Sell Signal based on Dow Theory

1. A sell signal can be recognized with similar methods, but you will have to look in the opposite direction.
2. When a market top and gets set back after, followed up with a rally that goes back up again and falls short of reaching the past high while penetrating recent lows when the next decline happens, it’s a clear sign for sale.

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