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.

Monday, October 11, 2010

Shanghai (could) Surprise (to the upside)!

Here's a potentially interesting one to watch. The C in BRIC has not has a great year, down 14% in local currency terms and for a time moved back in to technical bear market territory but the Shanghai Composite appears to be on its way back up. Recent resistance has just been broken; twice the bulls were batted back at 2,675 but we now have a triple top buy signal, as the third column of X's has finally broken the previous resistance.

The activated upside target is 3,275, but the bulls will have to break through the red bearish resistance line looming above at the 2,970 level.
As i've said before daily closing P&F's are good for giving general direction but lousy for trading. Note how the 25x3 chart has only just given the buy signal at 2,700 while the market bottomed at 2,375. That's 13% of upside before this chart gave the buy signal! It might have been possible to use a smaller box size or hourly charts, for a better trading opportunity. That said, if it does get to 3,275, that's still 20% more potential upside from here.

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