#financialliteracy Dow Jones theory of future trading:
Stated:
👉 Track high and low using trough and peak
👉 Persistent to trend until reversal is confirmed by a market average followed by other
👉 Both
#volume ( rise with price rise and vice versa ) and indices ( both indicators must be in same trend) confirm the change as a strong conviction to trend
👉
#Reversal trend of secondary one is not to be confused with the primary as it may be a short swing or rally
👉Focus on closing price irrespective of intraday movement as
1.Follow trend line
2.Wait for breakout in side ways/ line range/ trading range trends
👉The theory assumes that the market already has knowledge of every possible factor and that prices reflect current information.
👉This implies that there is no need to investigate further why assets are priced the way they are, but to act on price movements and volume and depend on signals and confirmation for trend reversals.
👀Indicators:
Dow Jones industrial average
Dow Jones transport average
🌟Trends:
According to this theory market has three types of trends:
1.Primary : Year or more
2.Secondry : Week to months
3.Minor : Days to week
🤔Behaviour of market:
Bull:
🎯Lower high followed by the higher high
🥂Accumulation 👉 participation (big move)👉excess (exit of most investors)
Bear:
🎯lower low followed by the lower high
🥂Distribution 👉panic (big move)👉despair