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Dow Theory

Trading Term

Foundational principles or tenets of technical analysis in financial markets created by Charles Dow that were developed to analyze and predict market trends. The 6 tenets consist of :

  1. The market discounts everything
  2. The market has three trends
  3. Market trends have three phases
  4. The indices must confirm each other
  5. The trading volume must conform with the price trends
  6. Trends persist until there is a clear reversal

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