Rising: The most recent high is higher than the previous high, and the most recent low is higher than the previous low (new high but not new low).
Falling: The most recent high is lower than the previous high, and the most recent low is lower than the previous low (new low but not new high).
Consolidation: The most recent high is higher than the previous high, and the most recent low is lower than the previous low; or the most recent high is lower than the previous high, and the most recent low is higher than the previous low. (Both new high and new low, both new low and new high, neither new high nor new low, neither new low nor new high.)
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Once the high and low points are determined, no matter how the market goes, just look at the market, and we can use the high and low points one by one to defend and attack.
The above definition proposed by Dow more than a hundred years ago has shown a tendency to be as objective as possible, but of course it has not reached 100% objectivity.
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Dow's definition of "trend" is objective, and his comparison method of "high and low points" is objective, but his definition of "high points" and "low points" is not completely objective, so there has been controversy over Dow's trend determination in history. However, it is very valuable that Dow was able to achieve such nearly objective research results more than a hundred years ago.
In fact, Dow Theory is already accurate enough. Price fluctuations are driven by the emotions of participants. No one can define high and low points completely objectively and accurately, otherwise the market will no longer exist.
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Then how do we determine high and low points? High and low points are divided into levels. The comparison of high and low points in the definition refers to high and low points of the same level. The comparison of high and low points of the same level is meaningful, and high and low points of different levels do not have the meaning of comparison. Therefore, to determine the high and low points of the same level, you must first understand the meaning of the trend level.
