👉 1. Overview of the market has absorbed everything that happened It refers to the overall effect of all stocks rather than individual stocks alone.
👉 2. Uptrend It must have the following characteristics: the resulting vertex and abyss must be higher than the vertex and previous bottom point while the downtrend vertex and bottom points formed It must be below the vertex and abyss that precedes it. This principle is the origin of the trend definition.
*** Dow also divided the trend periods into three periods, primary, secondary, and minor, in which he favored the above three periods against ocean waves. They are like tide, waves and ripples, respectively.***
💥The primary period lasts more than 1 year, while the secondary period lasts from 3 weeks to 3 months. The secondary period is considered a period of adjustment in the primary trend. If the primary trend is up, the secondary is down, or if the primary trend is down, the secondary is up. Which is said Adaptation is usually 1/3 or 2/3 of the original trend before it begins to reverse into the primary trend, but more often it occurs at the 50% level, while the minor lasts a long time. Less than 3 weeks, this minor is just a swing in price.
👉 3. If considering investment behavior in an important trend, such as an uptrend, there will be 3 strokes:
**The first moment is the moment that investors who are far-sighted He came to buy shares because he saw that the negative news was possible. Was completely absorbed in the market. And there is a chance that positive news will gradually emerge. Which this rhythm is called (accumulation phase)
**The second moment is the moment that investors focusing on investments according to market trends Get more involved in the market This is driven by positive business information. More apparent As a result, the overall price has increased.
**The third moment is the moment that there are more investors in the market. There will be a lot of positive news. There is more speculation which this condition Can be considered as telling investors who had foresight from the first moment. Should start gradually making profits before the sales force appeared. Which this rhythm is called the venting period of (distribution phase)
👉 4. Significance of the trend They should reconcile each other, meaning that in the Dow era there were two averages used as a measure of the overall picture: the industrial average and the rail average, which he saw. Signals of an uptrend or a downtrend in the market It won't matter if industrial and rail averages don't go in the same direction. It is at this point that the difference between the Dow theory and the Eliot wave theory is because of the Eliot wave. There is no mention of direction confirmation with other averages.
👉 5. Trading volume It is an important factor used to confirm the trend. For example, if the price trend is uptrend, the trading volume should increase accordingly. While the price moved up And the trading volume should be less if the price has moved down. This condition Therefore, it is considered that the trend of the price is still an uptrend.
💥On the other hand, if the price trend is downtrend, the trading volume should increase. When the price goes down and the trading volume should be less. While the price has rebounded As such, the price trend is still bearish.
However, the trading volume It's just a factor used for consideration. But what to use as a signal still based on price (especially the closing price)
👉 6. The trend will still be believed to exist. Until a trend reversal signal occurs. This principle is basically Another base of technical analysis that are still in use today which led to the study of Support and resistance, price patterns, and many other analytical tools. In identifying opportunities for changing trends.