Point and Figure False Breaks
False Break Chart Patterns
Similar to bull and bear traps, false (or marginal) breaks occur at minor Point and Figure support levels (from a previous low) or minor resistance levels (from a previous high). They should only be traded in an established trend.
Point and Figure Up-Trend
In a Point and Figure up-trend, if price falls below the previous low by only a small margin (normally only one box) and then promptly reverses upwards, buy on recovery above the previous low.
A possible weakness of Point and Figure charts: you will not see the recovery until price has increased by the reversal amount.
Point and Figure Down-Trend
The same applies to down-trends. If price rises above the previous high by a small margin and then promptly reverses, buy on the retreat below the previous high.