Dow Theory uses the price and volume to identify the “Demand and Supply” zone. As per Dow Theory, Charts with a lookback period of minimum 2 years, “Top and Bottoms” are identified. Then, next step is to determine whether they are “High top High bottom” or “low top low bottom”. If the sequence of Higher Tops and Higher Bottoms are seen then it is considered to be “Uptrend” and if the sequence of Lower Tops and Lower Bottoms are seen then it is considered to be a “Downtrend”. Trader can position himself when he can see increase in volume with increase in price surpassing the previous resistance area. Support = Buyers Zone, Resistance = Supply Zone.
, , Dow Theory, Demand, dow, Supply
