Technical Analysis > Dow Theory > Dow Theory - Lines (Ranging Markets)
Trading Education > Dow Theory > Dow Theory - Lines (Ranging Markets)

Dow Theory - Lines (Ranging Markets)

A secondary reaction may take the form of a line which may endure for several weeks — where price fluctuates within a narrow range of about five per cent.

Breakouts from a range can occur in either direction.

  • Advances above the upper limit of the line signal accumulation and higher prices;
  • Declines below the lower limit indicate distribution and lower prices;
  • Volume is used to confirm price breakouts.

See Trading Ranges for more detail.

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