DOW THEORY

Forex Market Technical analysis is the base instrument for a trader. Although not all traders rely on technical indicators, we highly recommend combining different methods to get a higher profit. So today we want to tell you how technical analysis appeared.

1. “father” of the technical analysis is Charles Dow, who created the world famous Dow Jones Industrial Average Index together with Edward Jones. Moreover, he was a head editor in the Wall Street Journal where he was publishing his Technical Analysis from 1900 to 1902 as a series of articles. Robert Rhea collected his works In 1932 and published. The Dow Theory. Although technical analysis has developed, it is based on the Dow theory.  ( The Fibonacci)


The basic tenets.

1. The price (average) discounts everything.

Main idea is that any factor that affects a price - economic, political, psychological - is already taken into consideration by a market and included in prices.

2. Market trends.

It is the worth to clarify what a “trend” is. Trend is the general direction of a market or a price. It can vary in length from short to intermediate, to long term. ( Another Post Populer Post 
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1st trend. It is also known as a major trend. Talking about the duration, it is long-term, the effect can continue for more than 1 year. This trend can influence both other trends.for a trader, it is the most important trend. You should define the direction of it and trade according to it.

2nd trend. Market also assumed as a correction of the primary trend. The duration varies from three weeks to three months. So in a bullish market, it has a downward direction, in a bearish market, it is an upward movement. He considered it as waves in the sea. (  Populer Post 
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1. The last one is a minor trend or “short swing”. It lasts from several hours to several weeks. It is a pullback of the secondary trend. So, It is believed that in this time period there is too much price noise, and looping on the slightest movements can lead to irrational trading decisions.