You may find yourself wondering what Dow theory has to do with trading on the Forex (Foreign Exchange marketwhere nations, corporations, and now retail traders go to exchange currencies). Well, before Charles Dow began writing his theory over a century ago, the idea of speculating on the markets was considered rather foolish. However, the Dow Theory is still considered to be one of the leading authorities on basic market philosophy and is relevant to traders on the Forex exchange or Wall Street.
Indeed, Dow Theory is a basic market philosophy that stresses technical analysis and keeping an eye on price action can help determine the presence of three primary movements within the market, including:
Primary Movement
Secondary Movement
Daily Fluctuations
The primary movement would be what most investors commonly identify as the bull or bear market. In other words, the primary movement is the general trend of the entire market and can last from several months or stretch into years. In an upward trend, or bull market, the price will continue to climb and establish new historical highs with a succession of higher lows. There may be temporary...
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