Bullish Point and Figure Patterns Explained

Bullish Point and Figure Patterns

Triple Top

The pattern is formed by three rallies (1,2,3), on the third rally it pushes past the resistance line formed by the first two.

The third column will rise past the resistance line an equal distance to that of the bottoms.

Breakout of a Spread Triple Top

This pattern is a variation to the triple top except that on the third rally it fails to reach the resistance line. On the fourth move it breaks past the resistance line and should rise an equal amount to that of it's bottoms.

Ascending Triple Top

Another variation of the triple top except in this case each consecutive top is higher than the last. However this pattern does not give a price objective like the triple top. The signal in this variation is to buy on the breakout.

Upward Breakout of a Bullish Resistance Line.

A variation of the ascending triple top except in this case there is a fourth consecutive top is higher than the last. The signal in this variation is to buy on the breakout.

Upward Breakout of a Bearish Resistance Line.

This pattern consists of a consecutive series of lower highs. When the price breaks through the resistance line a buy signal is given.

Bullish Trend Reversal Patterns

Inverted Head and Shoulders Pattern

The inverted head and shoulders pattern is found in candlestick, point and figure, and chart patterns and is considered one of the most reliable reversal patterns.

The price forms a low on column one, followed by a period of consolidation. A second low is created followed by another period of consolidation, the right shoulder is then formed followed by a buy signal as it crosses the neckline.

Parralel support and resistance lines can be drawn as well as a visible neckline.

The height of the lowest low should give a projection of the strength of the upward move.

Triple Bottom

The triple bottom is a variation of the inverted head and shoulders pattern. This pattern consists of three lows of similar height. After the third low is formed and the price movement breaks the neckline, a bullish signal is given. The expected rise should be of similar height as from the neckline to the low.

Double Bottom

The double bottom is a variation of the triple bottom pattern. This pattern consists of two lows of similar height. After the second low is formed and the price movement breaks the neckline, a bullish signal is given. The expected rise should be of similar height as from the neckline to the tops. It is important to note that before the breakout, the trend line is broken.

Bullish Rectangle Reversal

The downtrend forms a clear period of consolidation, the resistance line is then broken on a heavy volume day, it is at this point where the bullish signal occurs.