Introduction

Point & Figure price objectives can be determined using the horizontal count method with
a consolidation or congestion pattern. This counting method is based on the width of the
congestion pattern. The wider the congestion pattern is, the higher the price objective
upon the pattern break. A congestion pattern ends with a break above the pattern high or
below the pattern low. Chartists can then use a simple formula to estimate a
price Extension and apply this extension to the consolidation high or low for a Price
Objective. Keep in mind that these Price Objectives are rough estimates based on P&F
charting techniques. There is no guarantee that prices will reach the objective.

Congestion
Some sort of congestion pattern or reversal must form before chartists can consider the
horizontal count. Some Point & Figure patterns qualify as congestion patterns. These
include Triple Top Breakouts and Triple Bottom Breakdowns, Spread Triple Top
Breakouts and Spread Triple Bottom Breakdowns as well as Quadruple Top Breakouts and
Quadruple Bottom Breakdowns. These classic P&F patterns clearly mark a congestion
period that ends with a subsequent support or resistance break. The chart below shows JP
Morgan with a Quadruple Top Breakout in the upper right-hand corner. This Quadruple
Top marked a congestion pattern as prices moved sideways from June (red 6) to
December (red C). Notice that three reaction highs established a clear resistance level that
was broken with the current column of X's. Some other classic congestions and breaks are
shown as well.

The chart below shows Equinix (EQIX) with a pair of Spread Triple Bottom Breakdowns.
This is just a Triple Bottom with a couple extra columns that spread the pattern a little
wider. On the right-hand side, the red box marks the congestion pattern. Notice how the
stock moved to the 93 box and then traded sideways in January-February (red 2). One
month ends and the other starts with the red numbers. For example, January ends and
February starts at the red number 2. EQIX broke Spread Triple Bottom support with a
move below the prior two columns of O's.

As noted above, the congestion formation does not have to be a specific P&F pattern.
There needs to be a definable congestion pattern that is at least five columns wide and a
column that breaks this congestion. A clear support or resistance level should also be
visible. The congestion ends when a column breaks above resistance or below support.
Once broken, the width of the congestion is fixed and chartists can start the
counting process.

Classic Patterns

The next step is to count the number of columns in the congestion pattern.
This is the width. Counting is straightforward with the classic P&F patterns mentioned
above because their width is defined. A Triple Top Breakout, for example, consists
of five columns: three columns of X's and two columns of O's. The first two columns of
X's establish Triple Top resistance, the intervening Columns of O's represent the two
pullbacks. The third Column of X's forges the breakout. Once the breakout occurs,
chartists can multiply the width of the pattern by the box size and the reversal amount to
estimate the price Extension. This Extension is then added to the low of the
pattern for a target.
The chart above shows Chevron (CVX) with a Spread Triple Bottom Breakdown in
February 2009. The red 2 signals the start of February and the red 3 signals the end of
February (beginning of March). The width of this pattern is seven columns, which can be
counted from the green support line. The pattern is complete after the support break
because the width cannot change after this congestion break. The width (7) is multiplied
by the box size (1) and the reversal amount (3) for a projected Extension (7 x 1 x 3 = 21).
This Extension is subtracted from the high of the pattern for a bearish Price Objective (69
- 21 = 48).

As with the vertical count, some schools of thought only use 2/3 of the projected
Extension for bearish Price Objectives. A.W. Cohen, a pioneer in P&F charting, advocated
a 2/3 Extension for bearish counts. This probably has something to do with the bullish
nature of stocks. His 1984 book, How to Use The 3-point Reversal Method of Point &
Figure, was written with stock market trading in mind.
There is also a Triple Top Breakout on the Chevron chart. This pattern represents a
consolidation after a sharp advance. The width of the pattern (5) is multiplied by the box
size (1) and the reversal amount (3) for an Extension estimate (5 x 1 x 3 = 15). This amount
is then added to the low of the column for a bullish Price Objective (80 + 15 = 95).

Extended Congestions
While counting the width of a classic pre-defined P&F pattern is straight-forward,
counting the width of an extended congestion pattern is a bit different. Counts for
extended congestions include the column leading in, the actual congestion pattern and a
column leading out. Also note that some P&F practitioners include the columns leading in
with the classic reversal patterns shown in the prior section. This means a classic Triple
Top or Bottom would have one more column added to the count, thus making the
estimated Extension a little larger.
There are basically four pattern types that qualify as extended congestions.
Two are reversal patterns and two are continuation patterns. First, a bullish reversal forms
with a decline, congestion base, and an upside reversal breakout. Second, a bearish
reversal that forms with an advance, congestion top and reversal breakdown. Third, a
bullish continuation that forms with an advance, congestion pattern and continuation
breakout to the upside. Finally, a bearish continuation forms with a decline, congestion
pattern and continuation break to the downside.
For the two reversal patterns, the column leading into the congestion and the column
leading out will be in different directions. A bullish reversal forms with a column of O's
leading in (decline), a congestion base and a column of X's leading out that breaks
congestion resistance. The chart below shows Coca-Cola (KO) with a bullish reversal
pattern in red. The long column of O's establishes the downtrend. The congestion extends
for 16 columns and the congestion ends with the breakout column leading out. All told, the
width is 18 columns, which is exceptionally long. Using the formula above, the Price
Objective would be 90 (18 x 1 x 3 = 54, 36 + 54 = 90). Again, take these price objectives
with a grain of salt and employ other aspects of technical analysis for confirmation. The
KO chart also shows a bearish continuation congestion pattern (blue).

A bearish reversal forms with a column of X's leading in (advance), a congestion top and a
column of O's leading out that breaks congestion support. The chart for State Street (STT)
shows a column of X's leading in and forming a new high above 55. A congestion pattern
then formed as the stock traded flat for six columns. Congestion support was broken when
the column of O's exited the pattern to fix the width at 8 (1 column leading in, 6 for the
congestion and 1 column leading out). As noted above, some practitioners use 2/3 of the
reversal amount for bearish price Extensions. A full Extension targets a move to 31. A 2/3
Extension targets a move to 39.

The lead-in and lead-out columns for continuation patterns are in the same direction. A
bullish continuation consists of an advance with a column of X's leading in, a congestion
and an upside breakout to signal a continuation of the prior advance. A bearish
continuation consists of a decline with a column of O's leading in, a congestion and a
continuation lower with a congestion support break.
The chart below shows TimeWarner (TWX) with a bearish continuation congestion and a
bullish continuation congestion. The bearish pattern formed after a long column of O's
breaking below the prior lows. The stock traded flat for five columns and then broke
congestion support to signal a continuation lower. Two extensions were calculated, one
based on the full extension and one based on a 2/3 extension.
 Để ý cái box này. Họ ko tính
LPS. Mà chỉ tính từ BC và AR
=> (dùng conservative trước)

Signal Frequency

The examples shown above are based on daily price data with standard P&F box sizes.
Securities priced from 5.01 to 20 have 50-cent boxes. Securities priced 20.01 to 100 have
$1 boxes. These daily P&F charts provide a fairly long-term picture as most extend back to
2009. Chartists looking for more signals should try making the box size smaller and using
intraday price data, such as 60-minute data. A 20-50 cent box size with 60-minute data
works pretty well for the 3-6 month timeframe.
Assessing Risk
Establishing a Price Objective only covers the reward part of the risk-reward equation.
Chartists should also study the chart to assess risk. For bullish patterns and upside price
objectives, a move below support or the pattern low would clearly negate a breakout. The
box just below the pattern low often marks the worst-case level for a pattern failure.
Similarly, a Double Bottom Breakdown or a contradictory P&F pattern would argue for a
reassessment. For bearish patterns or downside price objectives, a move above resistance
or the pattern high would clearly negate a breakdown. The box just above the pattern high
often marks the worst-case level for a pattern failure. Similarly, a Double Top Breakout or
a contradictory P&F pattern would argue for a reassessment. There are sometimes
indications of potential failure before price hits the worst-case level. Chartists should
employ other technical analysis techniques to measure risk and monitor the unfolding
trend.
Conclusion

Horizontal price objectives provide chartists with a general price target based on the width
of the pattern. This makes sense, as longer congestion patterns mean more energy is
stored up for the subsequent break. It is kind of like a smoldering volcano (lửa cháy âm ỉ)
just before it blows. While the breakout is the most important element for these patterns,
nimble (nhanh nhẹn) players may be able to anticipate a bullish resolution by buying near
support. This would greatly improve the risk-reward ratio. From a P&F standpoint,
however, the pattern is not confirmed until there is an actual breakout. Once a breakout
occurs, very wide patterns can often produce unrealistic Price Objectives.
While a stock can certainly go to zero, most will not even come close to zero. Therefore,
horizontal counts that produce negative Price Objectives are best ignored. Similarly, a
Price Objective that forecasts a 300% advance should also be taken with a grain of salt
(nghi ngờ), especially if the stock is not part of the latest bubble. As with all indicator and
techniques, it is important to confirm your findings with complementary
technical analysis tools, such as momentum oscillators and chart patterns.

Further Study
Thomas Dorsey's Point & Figure Charting examines the basic ideas and key patterns of
P&F charts. Dorsey keeps his analysis simple and straightforward; as a relative strength
disciple, he devotes a complete chapter to relative strength concepts using P&F charts.
These concepts are tied in with market indicators and sector rotation tools to provide
investors with all they need to construct a portfolio. Additionally, Dorsey incorporates
lessons on how to use P&F charts with ETFs.
The Definitive Guide to Point and Figure, by Jeremy du Plessis, lives up to its title and is
required reading for the Chartered Market Technician exam. Chartists can learn about 1-
box P&F patterns/counts, 3-box patterns/counts and various trading strategies. du Plessis
also shows how to apply P&F charting techniques to other analysis tools, such as relative
strength and Fibonacci retracements, using plenty of real-world examples.
Segmenting PnF Counts
Bruce Fraser | May 27, 2017 at 08:00 AM
Wyckoffians often break up a large Point and Figure count into smaller count objectives. A
large count objective usually requires a significant period of time to be fulfilled and pauses
will occur along the way. Sometimes these pauses result in a period of Reaccumulation
prior to moving on to higher and higher price objectives. Segmenting PnF counts can help
to identify and evaluate these pauses.
Another very important reason to divide up PnF counts, is that often the entire base is not
Accumulation. It is important to only count the Accumulation portion of the base
structure. A decline can be stopped by a Selling Climax, but the strong hand of Composite
Operator absorption may not yet be present. If that is the case, then only a part of the base
is actual Accumulation. Over-counting a PnF Accumulation range is a common problem.
Segmenting the PnF count is the answer to this potentially costly error. We are endlessly
asking ‘how much of this trading range is Accumulation?’ What portion of this trading
range structure is ‘Intelligent Accumulation?’
Secondary Tests (ST) are drives downward from the Resistance area toward Support. After
a Selling Climax (SCLX) there remains an abundance of stock still in weak hands. This
Supply of stock will continue to be liquidated on each push down. (Click here for more
on Phase B and Secondary Tests) The C.O. will Support the stock with buying
demand in and around the bottom of the Accumulation area. Exhaustion of selling and
good demand by the C.O. will then result in rallies back toward the Resistance area of the
trading range. These price declines to Support are distinct and typically have high volume
(evidence of Supply). Secondary Tests are often used for the delineation points of
Segments. They are identifiable on the vertical and the PnF charts. There can be numerous
Segments in an Accumulation. Our example in this case has only two Segments.
 Nên hiểu là 1 vùng

Albemarle Corp. (ALB) is a stock we studied awhile back (click here for a link to the
April 2016 blog post). At that time, we took a partial PnF count after a study of the
vertical chart. Following the SCLX, there was a rally into an Upthrust (UT). Then a
massive decline took ALB to a new low below the SCLX. There is minimal evidence of
Accumulation between the ST and the SCLX and the entire ‘B Segment’ (green shaded
box) could be considered a continuation of the downtrend. A good rally from the ST low is
a clue of the emerging C.O. demand. Thereafter, good Support of ALB above the SCLX low
is very constructive. LPS#1 leads to a rally out of the Accumulation area. We took a PnF
count from LPS#1 to the ST as ‘Segment A’ (yellow shaded box). We suspect the footprints
of the C.O. in the rally following the ST low. This gives us confidence when counting the
PnF from LPS#1 to the ST. The essential question is whether the ‘Segment A’ PnF
price objective justifies the trade? The ‘Segment A’ PnF count is $86/$91, a conservative
and worthwhile trade objective.
The chart above was published in the original April 2016 post (with additional
modifications here). Segments are always counted from right to left. If there is
Accumulation it will always begin on the right side of the formation. The drive down to the
Secondary Test (ST) is well defined, as is the SCLX. ‘Segment A’ extends to the ST
and ‘Segment B’ extends to the SCLX. We are still unsure if the price action
from the SCLX to the ST is Accumulation. We flag this ‘Segment B’ count by adding
the columns to the ‘Segment A’ count. We will observe how the stock reacts to achieving
the ‘Segment A’ price objective. We are judging whether Reaccumulation or Distribution
forms at the ‘Segment A’ price zone. If the ‘Segment A’ price objective is all we get, it will
still be an excellent campaign.
In this up to date chart, ALB exactly touches $86 and begins a trading range that becomes
a Reaccumulation. We have ‘penciled’ the ‘Segment B’ count onto our chart. A formidable
Reaccumulation generates a confirming PnF count that approximately matches the entire
Accumulation count (Segments A & B). Therefore we conclude the ‘Segment B’ portion of
the PnF count was Accumulation. And now we are approaching the $110/$115 price
objective area with a potentially climactic acceleration. Does this necessarily mean the
onset of Distribution… No. But it could result in a pause. There is still a PnF objective
above current prices, which could be met and exceeded prior to a stopping action.
Segmenting PnF price objectives is a valuable technique for your Wyckoff toolkit. We will
devote more time to sharpening these skills.
All the Best,
Introduction
P&F Catapults form with two consecutive P&F signals in the same direction. A typical
Bullish Catapult forms with a Triple Top Breakout, a pullback and then a Double Top
Breakout. The ability to continue higher after the pullback shows underlying strength. A
typical Bearish Catapult forms with a Triple Bottom Breakdown, a bounce and then a
Double Bottom Breakdown. Selling pressure reasserts itself after a weak bounce to affirm
the prior bearish signal.

Bullish Catapult
A Bullish Catapult forms with an initial breakout, a short pullback and a second breakout.
While the ideal Bullish Catapult starts with a Triple Top Breakout, Quadruple Top
Breakouts or Multiple Top Breakouts are also possible. After the initial Triple Top
Breakout, prices reverse and move back into the pattern. The initial breakout or resistance
break is usually just 1-3 boxes. Prices move high enough to break resistance and there is
not much upside after the initial breakout. A 3-box reversal then forms and a new O-
Column declines back into the Triple Top pattern. This is just a pullback because the
O-Column does not break below the low of the pattern or forge a Double
Bottom Breakdown. Prices then turn back up with a new X-Column that exceeds the
prior X-Column to complete the catapult (Double Top Breakout). The pullback into the
pattern represents indecision among the bulls. The ability to overcome this indecision
with another breakout shows renewed strength.
The chart above shows Williams Sonoma (WSM) with three Bullish Catapults. As with
most P&F patterns, catapults can form as reversal or continuation patterns, depending on
the prior trend. The first Bullish Catapult reversed the downtrend with a Spread Triple
Top Breakout in February 2009 and a Double Top Breakout in March. Notice that the
breakout was 1-box and the pullback held above the low of the prior O-Column. The
second Bullish Catapult occurred with a Multiple Top Breakout, a four-box pullback, and a
subsequent Double Top Breakout. The third is a classic Bullish Catapult within an
uptrend, which makes it a continuation pattern.

Bearish Catapult

A Bearish Catapult forms with an initial breakdown, a short bounce, and a second
breakdown. While the ideal Bearish Catapult starts with a Triple Bottom Breakdown,
Quadruple Bottom Breakdowns or Multiple Bottom Breakdowns are also possible. After
the initial Triple Bottom Breakdown, prices reverse and move back into the pattern. The
initial breakdown or support break is usually just 1-3 boxes. Prices move low enough to
break support and there is not much downside after the initial breakdown. A 3-box
reversal then forms and a new X-Column advances back into the Triple Bottom pattern.
This is a weak bounce because the X-Column does not break below the high of the pattern
or forge a Double Bottom Breakout. Prices then turn back down with a new O-Column
that exceeds the prior O-Column to complete the catapult (Double Bottom Breakdown).
The bounce back into the pattern shows the bulls giving it one more go. However, the
bounce is weak and the second breakdown puts the bears in full control.
The chart above shows FedEx (FDX) with a Bearish Catapult consisting of a Triple Top
Breakdown and a Double Bottom Breakdown. Because the pattern includes the high at 97,
it would be considered a reversal pattern. Notice that the bounce carried all the way
to the prior high (X-Column), but did not exceed it to negate the pattern.

The chart above shows Unum Group (UNM) with a classic Bearish Catapult. This would be
considered a bearish continuation pattern because the breakdowns occurred after a couple
of Double Bottom Breakdowns and the high formed just before this pattern.
Objectives and Risk
The Horizontal Count Method is the preferred method for these patterns. In short, the
width of the pattern is multiplied by the box size and reversal amount to form an
estimated extension. This is added to the low of a Bullish Catapult or the subtracted from
the high of a Bearish Catapult for a Price Objective. Details and examples can be found the
ChartSchool. Price Objectives are not hard targets. Instead, they simply provide a
guesstimate for an upside or downside objective.
Chartists should also study the chart to assess risk. For example, a move below
support or the pattern low would clearly negate a breakout. The box just below
the pattern low often marks the worst-case level for a pattern failure. Similarly, a Double
Bottom Breakdown or a contradictory P&F pattern would argue for a reassessment. There
are sometimes failure clues before price hits the worst-case level. Chartists should also
employ other technical analysis techniques to measure risk and monitor the unfolding
trend.

Conclusion

Bullish and Bearish Catapults are at least seven columns wide, which makes them
above average in width for P&F patterns. Width is an important aspect of the pattern, as
wider patterns indicate a longer congestion phase that makes the subsequent breakout or
breakdown all the more important. It is sometimes possible to anticipate a
catapult pattern with the 3-box reversal that forms the last column. This would
be the seventh column for a classic catapult. The chart below shows FedEx with a possible
Bearish Catapult unfolding. After a Triple Top (should be bottom - PHAT) Breakdown, the
stock bounced back into the pattern with a 4-box X-Column. The next 3-box reversal down
(O-Column) could be used to anticipate further weakness below the prior O-Column. It
would take a 5-box O-Column to forge a Double Bottom Breakdown and complete the
Bearish Catapult pattern (red dots).
Further Study
Thomas Dorsey's Point & Figure Charting examines the basic ideas and key patterns of
P&F charts. Dorsey keeps his analysis simple and straightforward; as a relative strength
disciple, he devotes a complete chapter to relative strength concepts using P&F charts.
These concepts are tied in with market indicators and sector rotation tools to provide
investors with all they need to construct a portfolio. Additionally, Dorsey incorporates
lessons on how to use P&F charts with ETFs.
The Definitive Guide to Point and Figure, by Jeremy du Plessis, lives up to its title and is
required reading for the Chartered Market Technician exam. Chartists can learn about 1-
box P&F patterns/counts, 3-box patterns/counts and various trading strategies. du Plessis
also shows how to apply P&F charting techniques to other analysis tools, such as relative
strength and Fibonacci retracements, using plenty of real-world examples.