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.
Friday, September 30, 2011
The bears have had the ball and been advancing down-field. The target of 36 given by the first column of 0's from the high was achieved and was triggered by a triple bottom sell signal. The target of 14 was also given by a triple bottom sell signal and is active.
Need to see how the pattern develops from here as it could be a potential H&S. If so, may get support here and ultimately a move back up to 45-46.
Thursday, September 29, 2011
I'm using a 100 point box size on the Dow to strip out a lot of the recent 'noise'. The initial reversal from the August sell off gave a target to the upside of 12,200, which was activated but never achieved. The index got as high as 11,700 then reversed lower. The target of 9,600 was formed by that column of 0's from the high and was activated when the index moved below 11,000 - its still active. The most recent action has been supportative to the bears, in that the index has reversed lower at lower levels and reversed higher at lower levels (ie lower highs, lower lows). See for example how it got to 11,500 before reversing down, then most recently reversed lower at 11,300. The 12,700 target to the upside is not active - we would need to see another three box reversal then for the index to move above 11,400, taking out the previous high. Finally, I have put that target of 6,700 on the chart on the basis that the previous support at 10,700 did not hold during the last sell off (the index filled the 10,600 prior to reversing - remember where you saw it first!!!)
Wednesday, September 28, 2011
Anyway, post the recent decline in gold, this relationship appears to have put in a bottom, even if it proves to be temporary.
- Both will rise but the Dow will rise faster than gold
Tuesday, September 27, 2011
There is an active target of 9,600 in place but i'd be looking for the current column of X's to reverse imminently. If it did reverse here, the current column of X's would give an (inactive) target to the upside of 12,700 - we'd then need to see a move up through 11,400 to activate it.
Monday, September 26, 2011
Thursday, September 22, 2011
The pattern still looks like a forming right shoulder to me and noting the support that the FTSE has had previously at this level, it is possible that the shoulder will continue to develop and the market will reverse higher, up to 5,300.
The other alternative is the shoulder breaks now and we get a 'hard down' progressive drop down through 4,800 (a previous level of support) through 4,500 and down towards 4,100.
Friday, September 16, 2011
There is a minor bullish support line to push through. The longer term line is still very much in tact and has not been challenged since early 2011.
The 25x3 chart shows just how parabolic gold has gone the last 2 years. The recent action has given a double bottom sell signal and an active target of 1,600. I haven't labelled it but there is also an unactivated target to the upside of 2,250 but we would need to see a move above 1,900 for this to be activated.
So thats the range - 5,100 - 5,400. For this recent pattern to continue, the market should sell off from here.