So, the next part is the Dow Theory and we are now in the area from more complex chart analytics. And the Dow Theory is from Mr. Dow forgot his first name Andrew and Redoute Richard Richard, Richard dow. And he was the founder of this theory and from the Dow Industrial Average, the Dow Jones and yeah, his theory is trends formation theory, which have three major points and three major phases. There must be completed or there are in any chart. So, he said that If you have if you use his theory, you will never need to use the fundamental analysis, because all what happens and all what influences supply and demand is already given in every chart of any any index or any stock. So this is his major point you may be here from the the trend is your friend, that's from the Dow Theory.

What does it mean? So, three major phases and the first one is the primary trend. So if you have if just starting a trend, we have a primary one, which two or more secondary trends, and there are more third trends but they're only on a daily basis. So you won't see this here. So, what does it mean? The primary trend is a long time trend.

What could For months or years, and if we say we have a bullish market. So we have a positive long term trend, we have always secondary negative trends. The normal rules from the theory are that every high must be followed by a next higher high. Here, the 40 to 60. c, and from higher lows, so the lows are even higher. On the other hand, you have the negative trend. Yeah, it's the same on the other hand.

So how does this formation develops? That's the question. And those said there are two major points and there are the accumulation phase. They are here in the first time. So let's say if we have some stock or And index and we have really good news flow and the first investor strategic investors will invest in this stock or in this index, because they they know thumbs up or they hope that it will rise up. So in the first time with this, this one, okay, the trend is starting now.

And in goes up in the first time it's a secondary negative trend against the major trend. And you'll see on this time there is a good a good way for private trader, they say way, hey, okay, there was too high and here is a point where I can buy cheap, okay, and there's the point where banks, private traders, normally go in the market. So we have an intact positive trend for for long time investments for Yeah goods quite good investment, but what happens always with those investments and that's why the Dow Theory is mostly true there is the phase where euphoria comes off. So, if there if there comes a euphoria on from media or from friends and all talk about something like Bitcoin last year and the last year before so 2017 1819 was the year from Bitcoin and anybody talks about it. And if you remember, we had to earlier high on Bitcoin around 16,000 I think 16,000 Okay.

And there was a time on the whole media, talk about Bitcoin first time Then we have a correction in the market and the Bitcoin goes on. I don't know exactly. I think it was 12 k 12,000 for Bitcoin. And then more and more private traders starting to invest in Bitcoin and not only traders, so beginners, beginners for stock market and people who never invest in stocks or in a market before want to have bitcoins, because anybody talks about bitcoins and what happens, the price goes up goes up goes up, and there is a point where everyone talks about Bitcoin to want to invest Bitcoin, and the whole media talking about it, and even newspapers where which normally doesn't have anything to do with stocks. And maybe you remember any friend of you who never bought in stock and doesn't know anything from the stock market say hey, you need to invest Bitcoin and this is the time where where the euphoria after the highest point here and if you remember there was quite some people they say sell their their houses and their cars to buying Bitcoin for so ridiculous but this is always the point if anybody talks about it.

So also newspapers friends of you never invest if they all talk about something, and there is so much euphoria in this market, so there are experts who say, Oh, the Bitcoin will raise 100,000 euros in the next two years and all want to have it, they say okay 100,000 in two years. I buy one for 20,000 and have 80,000 profit. Okay, quite easy, but that's the whole problem on the Dow Theory and on the highest point for longtime primary trend, the euphoria point. And they'll say, on this point, there is the face of disruption. Because what happens those investors from here from the first time they have a really nice return on investment, okay? And they mean how maybe the highest point is reached and they sell, they sell what they have.

And what happened. If the first investors got out of the market, the stock price will sync. And if this happens to normally trade us goes out of market. And the last ones are normally those people who don't know anything about it and just buy blind and because they hear on other voices, but we have the same situation that we have them now primary trend. But it's a negative negative trend and it follows by all always, always secondary trends. You should have or we will have a look and trading view for Bitcoin because it's really interesting.

So we have to the price here was the highest $20,000 $20,000 per one bitcoin and it falls down. Firstly to 12 k then it goes a little bit up 16 k, then it was around eight, I think eight to 11 again and mid of the last year. This year, for a couple of months ago, the Bitcoin was at $4,000. So it goes up again. Yes. Now we have, I don't know, nine k 10. k around.

But sec you have to Dow Theory is always working on on products or stocks and indexes on Yeah. on high trending trending objects, because it always worked like this and if you ever have the feeling that somebody who will never invest talks about anything that you should invest to remember this one in the Dow Theory and remember if many people so newspapers media always talks about stocks and investing in markets, which they normally don't do. So we have the normal newspapers like Financial Times and anything they normally talk about it but it's their job, but if some others they never talked about it, and then talk and then start to talk about financials and investing objects. Remember this point the highest point in the Dow Theory and the disruption after it. so desperate that was the starting for our second part in chart analytics. We will have in the next video the momentum theory and yeah, we'll have a look in trading view now for the Bitcoin to show you this one again because it's Bitcoin is the perfect example for this actually.

And then we see us in our next video.