Dow Theory applied to BitcoinThere are always three trends in any market: Primary, Intermediate and Minor. All three trends are active all the time and may be moving in opposing directions.
1) It all starts from identifying Minor Tops(MT) and Minor Bottoms(MB). General time rule: MT is present if the next three successive days fail to penetrate its High. MB is present if the next three successive days fail to penetrate its low. General price rule: MT or MB is present if the price move after it retraces at least 1/3 of the previous Minor Trend.
2) Minor Trend. Short-term trend. General rule: A movement between MT and MB (or visa versa). General time rule: Lasts at least three days up to several weeks.
3) Intermediate trend. General Intermediate uptrend end/downtrend start rule: Intermediate Uptrendrend ends when downside zigzag of Minor Trends breaks the Intermediate Trendline installing at least two MBs below the Intermediate Trendline. If the Intermediate trendline is penetrated by only one MB and price then installs a new High of the Trend then the Intemediate Trendline should be adjusted to touch as many MBs as possible and not to intersect candles bodies. General Intermediate downtrend end/uptrend start rule: Intermediate Downtrend ends when upside zigzag of Minor Trends breaks the Intermediate Trendline installing at least two MTs above the Intermediate Trendline. If the Intermediate trendline is penetrated by only one MT and price then installs a new Low of the Trend then the Intemediate Trendline should be adjusted to touch as many MTs as possible and not to intersect candles bodies. Intremediate Trend reversal from Upside to Downside forms an Intermediate Top. Intermediate Trend reversal from downside to Upside forms an Intermediate Bottom. General time rule: Lasts from several weeks to several months.
3) Primary trend. General Primary uptrend end/downtrend start rule: Primary Uptrendrend ends when downside zigzag of Intermediate Trends breaks the Primary Trendline installing at least two Intermediate Bottoms below the Primary Trendline. If the Primary Trendline is penetrated by only one Intermediate Bottom and price then installs a new High of the Trend then the Primary Trendline should be adjusted to touch as many Intermediate Bottoms as possible. General Primary downtrend end/uptrend start rule: Primary Downtrend ends when upside zigzag of Intermediate Trends breaks the Primary Trendline installing at least two Intermediate Tops above the Intermediate Trendline. If the Intermediate trendline is penetrated by only one Intermediate Top and price then installs a new Low of the Trend then the Primary Trendline should be adjusted to touch as many Intermediate Tops as possible. General time rule: Lasts from several months to several years.
