Dow theory tells us to follow the trend by identifying the demand and supply zones using price and volume for a period of 2 years (daily charts)
It is useful for deriving the trend but not for buy\sell positions for short duration or intraday. It can be used for traders who trade on a monthly basis.
HB-HT with volume & LT-LB with volume derive buy and sell trends respectively.
Support – low
Resistance – high

2 Comments
  1. Naresh 4 years ago

    Hi,
    Your query:: I short on low trend with vol, how reliable is it
    What do you mean by the low trend?
    Your query:: Is dow theory necessary for every analysis?
    Not necessary but a better understanding of Dow Theory may help you to identify the market direction and it provides basic ideas about the market functioning.

    • Author
      Manoj 4 years ago

      When i short at the low bottom with volume, the reliability of the price going further down can occur only in long term right since Dow theory is for a longer duration.
      If i short today at low bottom, and the next two weeks sees a rally, before dropping down – can we hold on to the stock?

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