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, August 17, 2010

FTSE 100: 25x3 close

25 points on the FTSE lend themselves to quite 'noisy' charts but we had a solid 75 point reversal during the day, the FTSE closed at 5,350 and we therefore have a new column of X's, which I have inserted myself (dodgy looking column of 4 blue X's)!

We need some sort of resolution here. It can be seen that there is a shorter term bullish support line but looming overhead are two (red) short term bearish resistance lines. If the FTSE can push on through these and get up to the 5,450 level, we could have a push on to 5,750, which would give something akin to the double topping pattern we had in Q3 2007.

The column of six 0's which has just been reversed by today's up move has created an unactivated downside price objective of 4,950 which I have not placed on the chart. For it to become active, the bears will need to take control, reversing this up column of X's in to a new column of 0's and moving the index back below a closing level of 5,225, one box below the previous low of 5,250 made by the last column of 0's.

A difficult one to call at present because the battle between bulls and bears remains intense but this should be resolved soon.

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