Point and Figure

Question 1

Vertical Count (3-Box Reversal)

Answer 1

1. Vertical count begins from established support or resistance

• First column of X’s after major low (long column of O’s)
• or Second column of X’s after major low if first column was short (3-5 boxes)
• or Column of X’s after mini-bottom (a double bottom sell)
• or Column of X’s that creates significant breakout

2. Count the number of boxes in the support (XXX) column
3. Add the # of boxes X reversal X box size to the lowest O of the column to the left of the count column.

Question 2

Stop Loss on Vertical Count (3-box reversal)
Same for Horizontal Count

Answer 2

SL = the point where a new sell signal appears. This is a new low below the price that established support.

Question 3

Horizontal Count (3-Box Reversal)

Answer 3

1. Count # of columns between 0 that started the pattern and the X that broke out.
2. Multiply count by box size and reversal and add to the base (lowest point) of the consolidation.

Question 4

Does Horizontal Count Validate Vertical Count?

Answer 4

• If horizontal count is larger than vertical then the vertical count is validated and should be the initial estimate.

Question 5

Trendline break validity

Answer 5

1. Price must close above (below) the trendline - not on the trendline drawn through the box.
2. Both the start and finish of the box must be above/below the trendline.

Question 6

4 Methods for establishing horizontal counts (1-box reversals)

Answer 6

1. Find row with the most activity = width of the pattern = anchor point for projections
2. Cound the width of all rows in pattern / number of rows = width of pattern = anchor width calculation to the middle row.
3. Count number of columns between and including the “walls” of the pattern starting with the beginning of the right-hand wall = width = attach width calculation to the base of the exit column / method 3 and 1 often line up
4. Count the width of the pattern at the breakout or catapult point. If there are walls, it will be the width between and including the walls. = Anchor width calculation to the breakout box.

Question 7

3-box Reversal Double Tops

Answer 7

Double Top