Welcome to EV's point and figures. This blog is dedicated to the use of point and figure charts in technical analysis.
Although P&F first appeared in charts in the 1930's, it is an often overlooked techique for analysing stocks and charts. A poor relation compared to line and bar charts and their range of momentum indicators. Yet few charts provide a clearer picture of the daily battle between bulls and bears for market control.
Like most methods, it should not be used in isolation. It should form part of an analysts 'tool box' and be used with other techniques to help form an overall view.
The charts that appear on this blog and any accompanying comments are purely for information purposes only - my own personal take on where the prices may be heading. They do not constitute investment advice.
Tuesday, July 27, 2010
Dow Jones Update.: Be quick or be dead
The slow stochastic (89) is getting towards eye watering levels and volume may be low, but this chart is suggesting further upside.
A bit like the 50x3 FTSE P&F, the less noisy 100x3 closing chart gives a slightly different picture. We already have an activated upside target of 13,100 in place and also an active downside price objective of 8,100. The recent filling of the 10,500 box does give a double top buy signal, as the current column of X's has moved above the previous column of X's at 10,400. I'm just slightly wary that this column (of five X's) was completely taken out by the next reversal column of seven 0's. It makes for a weaker signal in my opinion.
Keep an eye on the short term (red) bearish resistance line. Still holding and could be tested around 10,600. We could potentially see the market reverse, find support and set up a move higher. If the current column of X's reverses now (300 point move required) you would have an unactivated upside target of 12,100. A reversal back up and a new column of X's rising above 10,600 would bring this in to play. For now, the current column of X's is the one to focus on.