Understanding the supply and demand zone to confirm the trend of the stock. Dow theory plays an essential role in establish the trend which is vital to place long/short positions.

  • : Dow Theory is essential to identify the trend of the particular stock.
  • : Daily Charts with a minimum look up period of 2 years. The trend forecast could be utilised for 2-3 months.
  • : Higher Bottom - Higher Top with volume signifies Bullish trend. Lower Top - Lower Bottom with volume signifies bearish trend.
  • : Major Critics - Not Sure. It remains at the top of the analysis since it captures the trend of the particular stock which plays a significant role in understanding bullish/bearish pattern.
  • : Create Long positions when bullish patterns are confirmed (HT - HB) and short positions when bearish patterns are identified (LB - LT). The trend will be visible for a period of 2-3 months.
  • : Support is the lowest level of the stock and resistance is the highest level of stock.
  • : What are the major critics against Dow Theory?
  • : What are Support and Resistance? *
1 Comment
  1. Naresh 4 months ago

    Hi,
    In response to your question

    Your Question 1:: What are the major critics against Dow Theory?
    The main criticism of the Dow Theory was that trends were lagging indicators and that by the time the primary trend was confirmed, the primary trend was already in place, and the investor lost part of that move.

    Your Question 2 :: What are Support and Resistance?
    Support and resistance levels are important points in time where the forces of supply and demand meet. Support is the level at which demand is strong enough to stop the stock from falling any further Meanwhile resistance is the level at which supply is strong enough to stop the stock from moving higher but there is no assurance that the support or resistance will hold.
    If a stock breaks through resistance, the old resistance level may become a support level meanwhile If support is violated, then that same level can act as future resistance.

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