Hello everyone,
I am very new to stock markets and learning the basics of Technial and Fundamental analysis. My hello to all you guys and hope to learn and share knowledge with you along our journey.
As I understand the Dow-Theory, it is called the "bread and butter" of technical analysis. Although being very simple and having some limitations, it is still the only method in use that has stood the test of Time. I have one question regarding Dow theory to the experts among you: Has the dow-thoery given a positive signal or a bull market.
One basic tenet of dow theory is that it considers only the closing price for determining the primary direction/trend and not the intraday fluctuations. Hence i've taken the chart of closing prices of Nifty from Jan-2008 to Jan-2009 as follows:
The theory states that in order to signal a bull-market price should make a higher-high and a higher-low. As we can see in the above diagram, until 27th- October (new year/vikram-samvat), the sequence was exactly the opposite (lower-highs and lower-lows) signalling a bear-market. However, since then on 20-Nov, the Nifty proceeded to make a higher low instead of lower low. My doubts are as follows:
1) A higher-high formation is yet to be made. If it is formed by breaking the 10-nov high of 3148 (and the low of 2553 is not broken), could a bull-market be signalled?
2) Could a bull-market be signalled even before that considering that the low of 27-oct is not broken?
Thanks in advance.
Cheers
Prahlad
I am very new to stock markets and learning the basics of Technial and Fundamental analysis. My hello to all you guys and hope to learn and share knowledge with you along our journey.
As I understand the Dow-Theory, it is called the "bread and butter" of technical analysis. Although being very simple and having some limitations, it is still the only method in use that has stood the test of Time. I have one question regarding Dow theory to the experts among you: Has the dow-thoery given a positive signal or a bull market.
One basic tenet of dow theory is that it considers only the closing price for determining the primary direction/trend and not the intraday fluctuations. Hence i've taken the chart of closing prices of Nifty from Jan-2008 to Jan-2009 as follows:
The theory states that in order to signal a bull-market price should make a higher-high and a higher-low. As we can see in the above diagram, until 27th- October (new year/vikram-samvat), the sequence was exactly the opposite (lower-highs and lower-lows) signalling a bear-market. However, since then on 20-Nov, the Nifty proceeded to make a higher low instead of lower low. My doubts are as follows:
1) A higher-high formation is yet to be made. If it is formed by breaking the 10-nov high of 3148 (and the low of 2553 is not broken), could a bull-market be signalled?
2) Could a bull-market be signalled even before that considering that the low of 27-oct is not broken?
Thanks in advance.
Cheers
Prahlad