Does dow theory work in cryptocurrencies?
Dow’s activities shaped market trends. These types of entities have become the main elements of the world of economics. Dow’s theory interprets market trends as follows:
- Primary trend: Lasting from months to many years, this is the direct market movement.
- Secondary trend: Lasting from weeks to a few months.
- Tertiary trend: Tends to die in less than a week or not longer than ten days. In some cases, they may last only for a few hours or a day.
By dividing market trends into primary, secondary, and tertiary, any investor can identify the best way to allocate credit. There is a potential for investment in each sector. If you believe that the cryptocurrency market has a positive primary trend but is currently experiencing a negative secondary trend, you may sell it when its price first rises.
The main problem here is being able to figure out what kind of trends you are currently seeing. Technical analysis is instrumental here. Many of the world’s largest companies spend billions of dollars hiring people who can perform practical technical analysis professionally.
Never go against the main long term trend, just hold as long as possible.