Basics of Dow theory trading strategy forecasts:What is Dow theory?
The Dow theory is a financial theory that says the market is in an up-trend if one of its averages (i.e. industrial or transportation) advances above a previous important high and is accompanied or followed by a similar advance in the other average. For example, if the Dow Jones Industrial Average (DJIA) climbs to an intermediate high, the Dow Jones Transportation Average (DJTA) is expected to follow suit within a reasonable period of time.
What Is Support?
Support refers to the price level that an asset does not fall below for a period of time. An asset's support level is created by buyers entering the market whenever the asset dips to a lower price. In technical analysis, the simple support level can be charted by drawing a line along the lowest lows for the time period being considered. The support line can be flat or slanted up or down with the overall price trend. Other technical indicators and charting techniques can be used to identify more advanced versions of support.
What Is Resistance?
Resistance, or a resistance level, is the price at which the price of an asset meets pressure on its way up by the emergence of a growing number of sellers who wish to sell at that price. Resistance levels can be short-lived if new information comes to light that changes the overall market’s attitude toward the asset, or they can be long-lasting. In terms of technical analysis, the simple resistance level can be charted by drawing a line along the highest highs for the time period being considered. Resistance can be contrasted with support.
what is support become become resistance?
when price breaks the resistance and after it will be create a support that same level this situation was called by support become resistance.
what is resistance become support?
when price breaks the support and after it will be create a resistance that same level this situation was called by resistance become support.
How To Read The Support Level On Chart?
Share prices which are subject to recurrent oscillations command the attention of investors at all times.
Aiding investors make their move; it is significant for them to read the resistance level on the chart which can bring a chance for them to make a good buy when the prices are balanced to rise higher.
How To Read The Resistance Level On Chart?
In disparity, when the price enters the resistance level, the market is noticeable of traders’ combat with a pressure to sell, when the price of the stock is balanced to fall further, going by its past performance.
Hence, these two factors are important for every investor to base his entry and exit moves in the share market when these determinants go a long way in representing the direction of the price of the stock, whether it will rise or drop.
