NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
In Dow Theory, which of the following confirms a primary uptrend?
In Dow Theory, a primary uptrend is confirmed when successive peaks and troughs are each higher than the previous ones, forming higher highs and higher lows. Divergence between indices or a narrow sideways range does not confirm an uptrend.
- AEach successive rally peak and trough is higher than the previous oneCorrect
- BVolume falls steadily as prices rise to new highs
- COnly one index makes a new high while the other declines
- DPrices oscillate within a narrow band for months
Explanation
Dow Theory defines an uptrend as a series of higher highs and higher lows. Falling volume on rallies and non-confirmation between indices are warning signs, and a narrow range indicates a sideways trend.
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