Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: wizzards wine who wrote (3265)	5/29/1998 6:00:00 AM
From: Bwe	Respond to of 34811

Hi Preston, The idea behind recognition of the "bullish shakeout reversal, the "low pole", or other p&f patterns, is that their configuration in the pattern gives an investor/trader an idea of what might happen next to a stock's supply/demand relationship. As Tom has said, "The Point & Figure chart patterns tend to repeat themselves and thus provide a high degree of predictability about the future move of the underlying stock". With TXI, the action point for a bullish shakeout reversal is the first 3 box reversal up into a column of X's. We don't know how far the sell signal will carry down the stock and we're looking for demand to be back in control before a commitment is made. No need to guess where on I-95 to buy the stock, just patiently wait for the 3 box reversal. As for ETH, a low pole forms on a downside breakout when a column of )'s exceeds one or more previous bottoms by at least 3 squares. The following column of X's then retraces 50% or more of the decline of the downside breakout column and the 50% retracement level is your action point. It's a "bottom fishing" formation. You buy this pattern BEFORE the stock gives a double top on the confidence that the pattern's formation indicates the selling pressure has mostly subsided and the stock is set up and poised to give a double top buy signal. Finding patterns in p&f charts is great fun and takes some detective work. When they work out with profits or money saved from a timely sale, it is quite satisfying. Take care, Bruce