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
‘Hi-low’-Dow :)
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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.
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?