Trendlines

Using trendlines helps us to make buy/sell decisions. When a trendline is broken, it signals a change in the posture of the stock. The two major trendlines: the bullish support line, and the bearish resistance line, can be used to identify areas of support and resistance in point and figure charts.

  • Bullish Support Line: When the stock has formed an apparent bottom, a bullish support line can be drawn. It should start in the box directly below the lowest O in the lowest column and move upward at a 45 degree angle.

  • Bearish Resistance Line: This is the reciprocal of the bullish support line. A bearish resistance line is to be drawn above the highest X in the highest column downward at a 45 degree angle.