Point and Figure Charts
Trend Reversals
Loss of Momentum
After an up-trend, marginal new highs (especially where accompanied by equal or lower lows) indicate a loss of momentum and may evolve into a stage 3 top.
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Here is a real life example from Ford Motor Company. Note the marginal new highs at [1] and [2] before a strong trend reversal.
Marginal Higher Lows
In a down-trend, a series of higher lows indicate accumulation.
Equal or rising highs are a further bullish sign.
Enter on completion of the third higher low: the start of the
fourth column of Xs.
An inverse of the pattern in an up-trend, where you have several marginal lower highs, would be a strong bear signal.
