Fifth Tenet

Fifth Tenet

The Fifth Tenet is that trends are also confirmed by volume. There are many reasons why price may move on low volume, but when prices move on high volume there is a greater chance that the move is representative of the overall market’s view.

When prices move on low volume, there could be many different explanations. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the “true” market view. If many participants are active in a particular security, and the price moves significantly in one direction, this is the direction in which the market anticipates continued movement.

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