9.3.17 | Educational Content | Dows Theory Applied to Patterns
Updated
(Code-Name_Virtue)
Charles Dow's theory states the market has three trends, Primary being the longest, Secondary moving along the Primary, and Minor (the shortest) moving along the Secondary. Consider which level of the trend you're chart pattern is forming on and it will help you determine which type of position you should focus on for your trade. In the example above we see that the Cup + Handle chart pattern would have been classified as a Secondary level chart pattern, and the analysis therefore should focus on a Secondary level position.
Charles Dow's theory states the market has three trends, Primary being the longest, Secondary moving along the Primary, and Minor (the shortest) moving along the Secondary. Consider which level of the trend you're chart pattern is forming on and it will help you determine which type of position you should focus on for your trade. In the example above we see that the Cup + Handle chart pattern would have been classified as a Secondary level chart pattern, and the analysis therefore should focus on a Secondary level position.
Note
I apologize the minor trend on the diagram is drawn inaccurately in the sense that it trends back in time on a few or more of the rallies.
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