One of the main theories of technical analysis is the dow theory. The doctrine was created by charles h. Dow and developed and refined during his tenure as editor of the wall street journal. The dow theory has been widely applied to trend analysis in stock and commodity markets and has been hailed as a “biblical” of financial markets. The rationale of the dow theory is based on two fundamental principles: the existence of three trends in the market, namely, major, secondary and short-term trends; and the existence of three movements in the market, namely, major, secondary and day-to-day fluctuations. 1. 1 the dow theory of market trends suggests that there are three trends in the market: major, secondary and short-term. The main trends are the main directions of markets, usually lasting for months or years. It is the main reference for long-term investment by investors based on secondary trends and a revision of major trends, usually lasting from weeks to months. It provides investors with short-term reference trends for medium-term operations and short-term trends are daily fluctuations in market prices, usually lasting from days to weeks. It provides investors with reference 1. 2 for short-term operations. The market movement dow theory suggests that there are three types of movements in the market: major movements, secondary movements and day-to-day fluctuations. Major movements are the main forces of the market, usually driven by basic economic factors such as economic growth, interest rate variations, etc. It is the main basis for investors ' investment decisions based on the minor movements and the modification of major movements, usually lasting several trade days to weeks. It provides investors with short-term forecasts of day-to-day fluctuations in market dynamics, which are daily fluctuations in market prices, often driven by market sentiment and speculative behaviour. The core principles of the dow theory, which provide investors with a reference for short-term operations, include the following: 2. 1 a comprehensive look at the dow theory emphasizes the need for a comprehensive look at markets, including prices, trade volumes and other market indicators. A comprehensive analysis of these factors makes it possible to judge market trends more accurately. 2. 2 according to the dow theory, there is a mutually validated relationship between the movements of different markets. That is to say, if the stock market and commodity markets are moving in a similar direction, then the trend is more credible. 2. 3 trends confirm that the dow theory emphasizes the need to wait for trends to be confirmed before doing so. The identification of major trends needs to be accompanied by the identification of secondary trends and signals of short-term trends. Investment decisions can only be made if they are fully recognized. 2. 4 the dow theory of volatility holds the market for volatility. In other words, there is a certain regularity of market volatility, which investors can use to predict and operate. The method of application of the dow theory consists mainly of the following steps: observation of market trends to understand market history and current price levels. This helps investors to understand the main, secondary and short-term trends in the overall trends and volatility of markets, which can be achieved by looking at key support and resistance positions in markets, trade volumes and price patterns in order to develop investment strategies based on the results of the analysis based on different trend types and volatility, and investors can develop investment strategies, including buying, selling, holding, etc
