Dow Theory: The Cornerstone of Technical Analysis
Over a century ago, journalist and economist Charles Dow laid the foundation for what we now call technical analysis. Dow never wrote a book — instead, he published a series of articles in The Wall Street Journal that formed the basis of what we know today as Dow Theory.
The theory is built on a simple idea: markets don’t move randomly — they follow clear, traceable trends. It also assumes that all available and hidden information is already reflected in the price, and that market movements can be studied using technical indicators, particularly the Dow Jones Industrial and Transportation Averages.
Dow Theory isn’t a magical forecasting tool, but it gives you a deep understanding of the market’s direction — helping you make informed trading decisions. It directly influenced modern tools like chart patterns, Elliott Wave Theory, and more.
📌 In the next article: we’ll break down the six core principles that define Dow Theory.
🔍 If you're serious about understanding how markets move, follow this series — it’s made for you.
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