Point & Figure charts are highly useful to traders. Point & Figure charting tells us is the strength of support and resistance and also the potential extent of a move – highly valuable information.
Point & Figure Resistance in Crude Oil
The spring rally in Crude Oil died out by May. The market went sideways for two months during May and June, showing significant market resistance had set in. Telltale Wyckoff indications told traders that selling had become strong and was preventing buyers from taking prices higher. One of the great benefits of Point & Figure charts is that significant resistance shows itself clearly by the horizontal movement in the area labeled A, further confirming the market’s weakness.
Traders can use this valuable information to their advantage. By taking a count of the resistance and projecting it, potential targets for the coming move can be calculated.
Point & Figure Targets
In this chart, two counts were taken. The first is the more conservative count, which is always applied as an initial target projection. In this case, the conservative projection indicated a reaction to 45. Because the market decline showed no ability to rally around the 45 level, a second count incorporating more of the distribution range projected a reaction down to 37. The market came to a stop at 38.
Notably, these projections were known ahead of time. Although we didn’t know for certain that the market would fall substantially lower, both counts indicated the potential for a large, worthwhile move. It’s our job as traders to monitor and manage our trades. As long as we see no contravening market action, we can assume the market will continue to head towards our projected counts. This is a strong advantage when managing a trade.
More Point & Figure Charting
Next Tuesday, November 10, we will be holding an in-depth webinar on the Wyckoff Method of Point & Figure charting. There is a 50% discount offered for those who register by November 10. After that date, the discount will no longer be available. You can learn more about the webinar and how to register at this link:
What box size and reversal do you use for CL( crude oil)?
I can’t get any size to accurately measure the move.
Thanks
I think that is a one point and a one box reversal, so 1 x 1 point & figure. You may not be using a low enough time frame to calculate the p & f. I’d use an hourly time frame with settings that account for the full range of the bar – high and low, not just close.