Almost every theory about the market can be applied in the forex market, and is also true for technical analysis. The Dow theory was created by Charles Dow from 1900 to 1902 for the purposes of analysis the average share price on the stock exchange, is one of the United States and first used to analyse financial market including forex. In General, investors using the Dow theory to know the right time in the buying or selling assets.
Dow theory is a technical analysis based on the price movement of stocks in the Dow Jones Industrial Average (DJIA) that consists of a blue chip stocks in the U.S. market. There are 6 basic components of the Dow theory, some of which are useful for analyzing technical trends on the forex market, namely:
1. forex market has 3 patterns of movement of the swing (Swing) swing the different principal (main swing) swing medium, long term and short term swing (short swing).
2. the market has the phase 3 which consists of a phase of initial purchases by investment experts, purchase phase by the public when they are interested in and then follow the steps experts, and sales phase by experts as prices have peaked for the realization of its profits (profit-taking phase).
3. all the news and rumors have been didiscount by the market as reflected in the price itself.
4. the interbank market has always been closely linked, the movement of one type of market can affect the other markets (intermarket relationships).
5. the strength of the trend is always confirmed by the number of trading volume (in particular for existing market bursanya)
6. the Trend will continue moving until there are signals that suggests the movement of the reversal. In General, if there is a decrease of 20% (for uptrend) direction trend will likely turn around (bearish).
For long-term forex trader Charles Dow theory is going to be very useful. Instead of a short-term trader or the trader daily theory that less workable because traders will tend to act before there is a valid confirmation. For the long-term traders to understand the different phases that will be very important to determine the exact trade momentum, as once said leading investor Warren Buffet: "first of all will enter the innovator, then the imitator (imitator) and the last of the idiots".
For the forex trader, understanding the movement of the swing pattern and 3 3 phase will be very useful, while the mendiscount market news and rumors are less visible effect given the almost most of the portion of the movement of the forex market is controlled by the central bank which has always released the issues important to the rest of the media world are on-line. Everything looks transparent, and the central bank could also regulate the liquidity of the currency of the country.
Dow theory is a technical analysis based on the price movement of stocks in the Dow Jones Industrial Average (DJIA) that consists of a blue chip stocks in the U.S. market. There are 6 basic components of the Dow theory, some of which are useful for analyzing technical trends on the forex market, namely:
1. forex market has 3 patterns of movement of the swing (Swing) swing the different principal (main swing) swing medium, long term and short term swing (short swing).
2. the market has the phase 3 which consists of a phase of initial purchases by investment experts, purchase phase by the public when they are interested in and then follow the steps experts, and sales phase by experts as prices have peaked for the realization of its profits (profit-taking phase).
3. all the news and rumors have been didiscount by the market as reflected in the price itself.
4. the interbank market has always been closely linked, the movement of one type of market can affect the other markets (intermarket relationships).
5. the strength of the trend is always confirmed by the number of trading volume (in particular for existing market bursanya)
6. the Trend will continue moving until there are signals that suggests the movement of the reversal. In General, if there is a decrease of 20% (for uptrend) direction trend will likely turn around (bearish).
For long-term forex trader Charles Dow theory is going to be very useful. Instead of a short-term trader or the trader daily theory that less workable because traders will tend to act before there is a valid confirmation. For the long-term traders to understand the different phases that will be very important to determine the exact trade momentum, as once said leading investor Warren Buffet: "first of all will enter the innovator, then the imitator (imitator) and the last of the idiots".
For the forex trader, understanding the movement of the swing pattern and 3 3 phase will be very useful, while the mendiscount market news and rumors are less visible effect given the almost most of the portion of the movement of the forex market is controlled by the central bank which has always released the issues important to the rest of the media world are on-line. Everything looks transparent, and the central bank could also regulate the liquidity of the currency of the country.
Posted by Unknown on Friday, February 6, 2015 - Rating: 4.5
Title : Dow Theory On The Forex Market
Description : Almost every theory about the market can be applied in the forex market, and is also true for technical analysis. The Dow theory was created...
Description : Almost every theory about the market can be applied in the forex market, and is also true for technical analysis. The Dow theory was created...
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