๐ง Dow Theory: The Cornerstone of Technical Analysis
Over a century ago, journalist and economist Charles Dow laid the foundation for what is known today as technical analysis. Dow did not write a book but published a series of articles in the Wall Street Journal that established the rules of "Dow Theory," which are still taught and applied today.
The theory is based on a simple principle: the market does not move randomly, but rather in clear trends that can be tracked and understood. It assumes that all known and unknown information is already reflected in the price, and that market movements can be analyzed through studying technical indicators, especially the Dow Jones Industrial and Transportation Averages.
Dow Theory is not a magical prediction tool, but it provides you with deep insight into the overall market trend and helps you make informed decisions. It has directly influenced the development of modern technical analysis tools such as price patterns, Elliott Wave Theory, and others.
๐ In the next article: We will explain the six fundamental principles on which the theory is based.
