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The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation.The theory was derived from 255 editorials in The Wall Street Journal written by Charles H. Dow (1851–1902), journalist, founder and first editor of The Wall Street Journal and co-founder of Dow Jones and Company.
A chart pattern or price pattern is a pattern within a chart when prices are graphed. In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or ...
He believed patterns and business cycles could possibly be found in this data, a concept later known as "Dow theory". However, Dow himself never advocated using his ideas as a stock trading strategy. In the 1920s and 1930s, Richard W. Schabacker published several books which continued the work of Charles Dow and William Peter Hamilton in their ...
Triple bottom. Most of the rules that are applied in the formation of the triple top can be reversed in the formation of triple bottom. As far as volume is concerned, the third low bottom should be on low volume and the rally up from that bottom should show a marked increase in activity.
On a technical analysis chart, a gap represents an area where no trading takes place. On the Japanese candlestick chart, a window is interpreted as a gap. Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes with little or no trading in between.
Reactive support and resistance are the opposite: they are formed directly as a result of price action or volume behaviour. They include Volume Profile, Price Swing lows/highs, Initial Balance, Open Gaps, certain Candle Patterns (e.g. Engulfing, Tweezers) and OHLC. [4]
The pattern is formed by two price minima separated by local peak defining the neck line. The formation is completed and confirmed when the price rises above the neck line, indicating that further price rise is imminent or highly likely. Most of the rules that are associated with double top formation also apply to the double bottom pattern.
The pattern is made up of three candles: normally a long bearish candle, followed by a short bullish or bearish doji or a small body candlestick, [1] which is then followed by a long bullish candle. To have a valid Morning Star formation, most traders look for the top of the third candle to be at least halfway up the body of the first candle in ...