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, December 21, 2010

FTSE 100 - all targets pointing higher

This is a 50x3 closing chart, based on yesterday's close and giving the 'big picture' from the 2007 peak. What previously looked like a forming double top pattern is now looking more bullish. The FTSE is currently at around 5,942 and if it can close above 5,950 or 6,000 and hold this level, that 7,250 target will become activated (the 6,500 target is already active).

For the bears, while the previous high in April has already been filled and there has clearly been resistance around this level, first in April and more recently in November. You can also have double top patterns without them being 'perfect' double tops but clearly to push the bearish case, we would need to see the FTSE consolidate at or below the current 5,850 box, them move lower in the New Year, which is still possible.

For now though the bulls have the ball and are advancing up the field. There are no obvious active downside targets. We therefore can't rule out a possible assault on the 2007 high. Maybe that is where we will see the 'true' double top.

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