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.