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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.
Open-high-low-close chart – OHLC charts, also known as bar charts, plot the span between the high and low prices of a trading period as a vertical line segment at the trading time, and the open and close prices with horizontal tick marks on the range line, usually a tick to the left for the open price and a tick to the right for the closing ...
Charles Henry Dow (/ d aʊ /; November 6, 1851 – December 4, 1902) was an American journalist [1] who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. Dow also co-founded [ 2 ] The Wall Street Journal , [ 3 ] which has become one of the most respected financial publications in the world.
Elliott's theory relies on analyzing price charts to identify wave patterns, which are fractal in nature, meaning they repeat across different timeframes, and discern what prices may do next; thus the application of the Wave Principle is a form of pattern recognition.
The aspects of a candlestick pattern. A candlestick chart (also called Japanese candlestick chart or K-line [7]) is a style of financial chart used to describe price movements of a security, derivative, or currency. Stock price prediction based on K-line patterns is the essence of candlestick technical analysis.
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 ...
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.
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.