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What is Dow Theory in Technical Analysis?

Charles Dow (1851-1902): The Father of Technical Analysis, and the discoverer of the Dow Theory. It lays down the guidelines to understand how the market moves and the foundation on which the monument of Technical Analysis stands today. Dow Theory can simply be represented as the ‘6 Tenets of Dow Theory
• Market moves in summation of three trends
• Market trends have three phases
• All news is discounted in the stock market
• Averages must confirm
• Volumes confirm trends
• Trends continue, unless definitive reversals come about

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