Point and Figure Charts: Trend Reversals

Trend Reversal Patterns

Point and Figure Charts: Loss of Momentum

After an up-trend, marginal new highs on the Point and Figure chart (especially where accompanied by equal or lower lows) indicate a loss of momentum and may evolve into a stage 3 top.

Here is a Point and Figure chart for Ford Motor Company. Note the marginal new highs at [1] and [2] before a strong trend reversal.

Point and Figure Charts: 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.

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