A line-like narrow-range adjustment refers to a price fluctuation phenomenon where both the Dow Jones Industrial Average and Railroad Average move within a range of no more than 5% amplitude for a period of no less than 2-3 weeks. A line-like narrow-range adjustment may indicate an accumulation process and predict further price increases. Conversely, if prices break below the lower boundary of the line-like adjustment zone, it suggests a distribution process and predicts further price declines. The above principles are equally applicable to futures markets.
It is noteworthy that in the Line-like Narrow-range Adjustment Theorem, Dow strongly emphasizes maintaining a neutral stance, insisting that the narrow-range adjustment itself does not carry any directional market forecasting information.