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    • Overview
      • Why Analyze Securities?
      • Technical Analysis
      • Fundamental Analysis
      • Random Walk vs. Non-Random Walk
      • Asset Allocation and Diversification
      • John Murphy's 10 Laws of Technical Trading
      • John Murphy's "Charting Made Easy" eBook
      • Technical Analysis 101
        • TA 101 – Part 1
        • TA 101 – Part 2
        • TA 101 – Part 3
        • TA 101 – Part 4
        • TA 101 – Part 5
        • TA 101 – Part 6
        • TA 101 – Part 7
        • TA 101 – Part 8
        • TA 101 – Part 9
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        • TA 101 – Part 13
        • TA 101 – Part 14
        • TA 101 – Part 15
        • TA 101 – Part 16
        • TA 101 – Part 17
      • Irrational Exuberance
      • Cognitive Biases
      • Arthur Hill on Goals, Style and Strategy
      • Arthur Hill on Moving Average Crossovers
      • Multicollinearity
      • "The Trader's Journal" by Gatis Roze
        • Stage 1: Money Management
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        • Stage 7: Buying
        • Stage 8: Monitoring Your Investments
        • Stage 9: Selling
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        • Additional Reading
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      • Why and How To Use Correlation
    • Chart Analysis
      • What Are Charts?
      • Support & Resistance
      • Trend Lines
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      • Introduction to Chart Patterns
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        • Symmetrical Triangle
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        • MarketCarpets
        • Relative Rotation Graphs (RRG Charts)
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      • Point and Figure Charts
        • Point and Figure Basics
          • Introduction to Point & Figure Charts
          • Point & Figure Scaling and Timeframes
          • P&F Trend Lines
        • Classic Patterns
          • P&F Bullish Breakouts
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          • P&F Signal Reversed
          • P&F Catapults
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          • P&F Price Objectives: Breakout and Reversal Method
          • P&F Price Objectives: Horizontal Counts
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    • Technical Indicators & Overlays
      • Introduction to Technical Indicators and Oscillators
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        • Distance From Highs
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        • Ease of Movement (EMV)
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        • High Low Bands
        • High Minus Low
        • Highest High Value
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        • Mass Index
        • MACD (Moving Average Convergence/Divergence) Oscillator
        • MACD-Histogram
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        • Negative Volume Index (NVI)
        • On Balance Volume (OBV)
        • Percentage Price Oscillator (PPO)
        • Percentage Volume Oscillator (PVO)
        • Performance Spread
        • Price Relative/Relative Strength
        • Pring's Know Sure Thing (KST)
        • Pring's Special K
        • Rate of Change (ROC)
        • Relative Strength Index (RSI)
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        • StockCharts Technical Rank
        • Slope
        • Standard Deviation (Volatility)
        • Stochastic Oscillator (Fast, Slow, and Full)
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        • Traffic Light
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        • True Range
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        • TTM Squeeze
        • Typical Price
        • Ulcer Index
        • Ultimate Oscillator
        • Vortex Indicator
        • Weighted Close
        • Williams %R
      • Technical Overlays
        • Anchored VWAP
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        • Double Exponential Moving Average (DEMA)
        • Hull Moving Average (HMA)
        • Ichimoku Cloud
        • Kaufman's Adaptive Moving Average (KAMA)
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        • Triple Exponential Moving Average (TEMA)
        • Volume-by-Price
        • Volume-Weighted Average Price (VWAP)
        • ZigZag
    • Market Indicators
      • Introduction to Market Indicators
        • Market Indicator Dictionary
      • Advance-Decline Line
      • Advance-Decline Percent
      • Advance-Decline Volume Line
      • Advance-Decline Volume Percent
      • Arms Index (TRIN)
      • Bullish Percent Index (BPI)
      • DecisionPoint Intermediate-Term Breadth Momentum Oscillator (ITBM)
      • DecisionPoint Intermediate-Term Volume Momentum Oscillator (ITVM)
      • DecisionPoint Swenlin Trading Oscillator (STO)
      • High-Low Index
      • High-Low Percent
      • McClellan Oscillator
      • McClellan Summation Index
      • Net New 52-Week Highs
      • Percent Above Moving Average
      • Pring's Bottom Fisher
      • Pring's Diffusion Indicators
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        • Wyckoff Market Analysis
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        • The Wyckoff Method: A Tutorial
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        • Introduction to Elliott Wave Theory
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    • Trading Strategies & Models
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        • MACD Zero-Line Crosses With Swing Points
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          • Finding Support and Resistance in Moving Averages
          • Guppy Multiple Moving Average: An MA Ribbon Designed to Tip the Market’s Hand
          • How To Trade Price-to-Moving Average Crossovers
          • Trading the Bounce: Finding Support and Resistance in Moving Averages
          • Trading the Death Cross
          • Trading Using the Golden Cross
          • Using the 5-8-13 EMA Crossover for Short-Term Trades
        • Moving Momentum
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On this page
  • Understanding P&F Trend Lines
  • Changing Trend Lines
  • Bullish Support Line
  • Bearish Resistance Line
  • Trend Line Adjustments
  • Creating P&F Trend Lines
  • Concluding Thoughts

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  1. Table of Contents
  2. Chart Analysis
  3. Point and Figure Charts
  4. Point and Figure Basics

P&F Trend Lines

PreviousPoint & Figure Scaling and TimeframesNextClassic Patterns

Last updated 11 months ago

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Understanding P&F Trend Lines

Trend lines on 3-box Reversal P&F charts are drawn at 45 degrees up and 135 degrees down. An ascending trend line is called a Bullish Support Line, and a descending trend line is called a Bearish Resistance Line. Because these lines are drawn at specific angles, they represent a specific rate of ascent or descent. P&F trend lines define the overall trend and help identify signals in the trend's direction.

Changing Trend Lines

In a P&F chart, there's always a Bullish Support Line or Bearish Resistance Line. After a break above the Bearish Resistance Line, a Bullish Support Line will be drawn from an important low. Extending up at a 45-degree angle, this line will remain in force until broken. Once broken, the Bullish Support Line will cease, and a new Bearish Resistance Line will be drawn from an important high near the break. Extending down at a 135-degree angle, this line will remain in force until broken.

The chart below shows Noble Drilling (NE) with four trend lines. The Bearish Resistance Line extended through 2008 and was broken in early 2009 (red 2). The Bearish Resistance Line ended, and a Bullish Support Line was drawn from the low. This line extended the rest of the year and was broken in April 2010 (between red 4 and red 5). A new Bearish Resistance Line was drawn from the high until the October 2010 break (red A).

Bullish Support Line

Generally, an uptrend is present when prices exceed the Bullish Support Line. This line extends up at a 45-degree angle to ensure a certain rate of ascent. Sideways price action or a slower rate of ascent will lead to a trend line break. According to P&F theory, bullish signals should be taken when above this trend line, and bearish signals should be ignored. This is trading in the direction of the bigger trend.

The chart below shows Agilent (A) with a blue Bullish Support Line. There were at least three bullish signals above this trend line. There were two Triple Top Breakouts in 2009, followed by a Bearish Signal Reversed Breakout at the end of 2010. The red “A” on the chart marks the Double Top Breakout that confirms the Bearish Signal Reversed pattern. This red “A” also marks the month of October.

Bearish Resistance Line

A downtrend is present when prices remain below the Bearish Resistance Line. This line extends down at a 135-degree angle, just a 45-degree angle turned upside down (180 - 45 = 135). This angle requires a certain rate of descent. Sideways price action or a slower decline would lead to a trend line break. According to P&F theory, bearish signals are preferred when below the Bearish Resistance Line. Bullish signals should be ignored or used to take profits on short positions.

The chart below shows Qualcom (QCOM) with a Bearish Resistance Line in the latter part of 2008. After establishing this line, the stock forged a Spread Triple Bottom Breakdown and a Triple Top Breakdown in October. The red “A” marks the beginning of October, and the red “B” marks the beginning of November.

Trend Line Adjustments

It ain't broken until it's broken. Sometimes, an O-Column declines right to the trend line and reverses back up. Technically, this is not a trend line break. However, a new trend line is required to reflect this test.

The chart below shows that McDonald's stock (MCD) touched trend lines thrice in 2009. The boxes that coincided with the trend lines were printed with a red 3, a red 5, and an O. Because these trend lines were not broken, the line shifted down one box to reflect an adjusted ascent rate.

The same holds for Bearish Resistance Lines. Sometimes an advance extends to the same box as the Bearish Resistance Line but does not break this trend line. After the subsequent downturn, a new Bearish Resistance Line is added based on this new reaction high.

The chart below shows CME Group (CME) hitting the Bearish Resistance Line a few times in the middle of 2010. Despite challenging these trend lines, there was never an actual breakout. After the reversal back down, a new trend line was drawn one square higher.

Creating P&F Trend Lines

You can add P&F Trend Lines to any P&F chart using the “Trend Lines” overlay in the Overlays dropdown on our P&F Chart Workbench.



Concluding Thoughts

Trend lines drawn on 3-box Reversal P&F charts are more objective than trend lines drawn on bar or line charts. Chartists can use this objectivity to establish a trend biased based on the trend line displayed. A bullish bias is present when the current trend line is a Bullish Support Line, while a bearish bias is present with a Bearish Resistance Line. Daily P&F charts cover a fairly long timeframe. Chartists can use the daily P&F chart to establish a big trend bias before turning to 30-minute P&F charts to look for signals in harmony with that trend.

Click here to view a live version of the chart.
Bearish and Bullish Resistance Lines in a P&F chart.
Bullish Support Line, a Triple Top breakout, and a Bearish Signal Reversed in a P&F chart.
P&F chart showing a Bearish Resistance Line, a Spread Triple Bottom breakdown, and a Triple Top breakdown in a P&F chart.
Three trend line touches are seen in this chart. Because the trendlines didn't break, the line shifted down one box to reflect an adjusted ascent rate.
The Bearish Resistance Line was hit a few times but never broke. A new trendline was drawn one square higher
Chart settings for P&F Trendlines using SharpCharts.
Chart Overlay settings for Trendlines in P&F charts.
A P&F chart from StockCharts.com showing bearish and bullish resistance lines
P&F chart from StockCharts.com showing a bullish support line, triple top breakout, and a bearish signal reversed
P&F chart from StockCharts.com showing a bearish resistance line, a triple bottom breakdown, and a triple top breakdown
P&F chart from StockCharts.com showing three trendline touches that didn't break so to adjust for the ascent rate one trendline shifted down
A P&F chart from StockCharts.com showing an adjustment to a Bearish Resistance Line that never broke
SharpChart settings for trendlines in P&F charts when using StockCharts.com
Chart settings for P&F trendlines in StockCharts.com