The basics of the market, the first step of technical analysis — learn Dow Theory
Learn the Basics of the Market
“Dow Theory”Understand it with charts
Until now we have talked about money management and the mental side, but from here onthe basics of technical analysiswill be written about.
We will clearly summarize one by one the things that “are good to remember.”
The first point to understand Dow Theory isto observe the movements of “highs” and “lows”.
■ What is Dow Theory?
Dow Theory is a fundamental theory for analyzing market price movements based on the ideas of Charles Dow.
Rather than something that issues subtle buy/sell signals,it is a foundation for thinking about “what the market is doing right now.”as a basis for understanding the flow of the market.
Among them, the most straightforward in chart analysis isthe raising and lowering of highs and lows.
Once a trend is formed, it is believed to continue until a clear reversal signal appears.
Therefore, instead of judging solely by gut feelings like “it should go up soon” or “it should go down soon,”it is important to look at the movements of highs and lows to confirm whether the trend has been broken.
Therefore, instead of judging solely by gut feelings like “it should go up soon” or “it should go down soon,”it is important to look at the movements of highs and lows to confirm whether the trend has been broken.