objective.
empty. Count the number of columns in the congestion area andthen project that number up or down from the line that was usedfor the count.
PRICE PATTERNS
Pattern identification is also possible on point and figure charts.Figure 11.7 shows the most common types.
As you can see, they’re not much different from onesalready discussed on bar charting. Most of the patterns are varia-tions on the double and triple tops and bottoms, head and shoul-ders, V’s and inverted V’s, and saucers. The term “fulcrum” showsup quite a bit in the point and figure literature. Essentially, the ful-crum is a well defined congestion area, occurring after a significantadvance or decline, that forms an accumulation base or a distrib-ution top. In a base, for example, the bottom of the area is sub-jected to repeated tests, interrupted by intermittent rallyattempts. Very often, the fulcrum takes on the appearance of adouble or triple bottom. The basing pattern is completed when abreakout (catapult) occurs over the top of the congestion area. 
Figure 11.7 Reversal patterns. (Source: Alexander H. Wheelan, StudyHelps in Point and Figure Technique [New York, NY: Morgan, Rogers andRoberts, Inc., 1954] p. 25.) Reprinted in 1990 by Traders Press, P.O. Box6206, Greenville, SC 29606.]Point and Figure Charting 277
Those reversal patterns with the most pronounced hori-zontal ranges obviously lend themselves quite well to the taking ofcount measurements. The V base, in contrast, because of theabsence of a significant horizontal price area, would not beamenable to the taking of a horizontal count. The blackened boxesin the chart examples in Figure 11.7 represent suggested buyingand selling points. Notice that those entry points generally coin-cide with the retesting of support areas in a base or resistance areasin a top, breakout points, and the breaking of trendlines.
Trend Analysis and Trendlines
The price patterns in Figure 11.7 show trendlines drawn as part ofthose patterns. Trendline analysis on intraday charts is the sameas that applied to bar charts. Up trendlines are drawn under suc-cessive lows and down trendlines are drawn over successive peaks.This is not true of the simplified point and figure chart, whichwe're going to study next. It utilizes 45 degree lines and plotsthem differently.
3 BOX REVERSAL POINT ANDFIGURE CHARTING
In 1947, a book on point and figure was written by A.W. Cohenentitled, Stock Market Timing. The following year, when theChartcraft Weekly Service was started, the book’s name waschanged to The Chartcraft Method of Point & Figure Trading. Severaltevised editions have been published since then to include com-modities and options. In 1990, Michael Burke wrote The All NewGuide to the Three-Point Reversal Method of Point & FigureConstruction and Formations (Chartcraft, New Rochelle, NY).
The original 1 box reversal method of plotting marketsrequired intraday prices. The 3 box reversal was a condensation ofthe 1 box and was meant for intermediate trend analysis. Cohenreasoned that because so few 3 box reversals occurred in stocksduring the day that it was not necessary to use intraday prices to278 Chapter 117
construct the 3 box reversal chart. Hence the decision to use onlythe high and low prices, which were readily available in mostfinancial newspapers. This modified technique, which is the basisof the Chartcraft service, greatly simplified point and figure chart-ing and made it accessible to the average trader.
CONSTRUCTION OF THE 3 POINTREVERSAL CHART
The construction of the chart is relatively simple. First, the chartmust be scaled in the same way as the intraday chart. A valuemust be assigned to each box. These tasks are performed for sub-scribers to the Chartcraft service because the charts are alreadyconstructed and the box values assigned. The chart shows a seriesof alternating columns with x’s representing rising prices and theo columns showing falling prices. (See Figure 11.8.)
The actual plotting of the x’s and o’s requires only the highand low prices for the day. If the last column is an x column(showing rising prices), then look at the high price for the day. Ifthe daily high permits the filling in of 1 or more x’s, then fill inthose boxes and stop. That’s all you do for that day. Rememberthat the entire value of the box must be filled. Fractions or partialfilling of the box don’t count. Repeat the same process the nextday, looking only at the high price. As long as prices continue torise, permitting the plotting of at least one x, continue to fill inthe boxes with x’s, ignoring the low price.
The day finally comes when the daily high price is nothigh enough to fill the next x box. At that point, look at the lowprice to determine if a 3 box reversal has occurred in the otherdirection. If so, move one column to the right, move down onebox, and fill the next 3 boxes with o’s to signify a new down col-umn. Because you are now in a down column, the next day con-sult the low price to see if that column of o’s can be continued. Ifone or more o’s can be filled in, then do so. Only when the dailylow does not permit the filling in of any more o’s do you look atthe daily high to see if a 3 box reversal has occurred to the upside.If so, move 1 column to the right and begin a new x column.Point and Figure Charting 279
a RR ROC RRTS
EXPLANATION ef CHARTS
BUY/COVER SHORT
 
BUY/COVER SHORT
SELL/GO SHORT
SELL/GO SHOMT.BUY/COVER SHORT
AUY/COVER SHORT
SELL/GO SHOBT-SELL/GO SHORT
MONTHINITIAL BUY.
SCALE
POINT & FIGURE TECHNIQUESBUY SIGNAL - Occurs whan o column of Xs rises one box higher PULLBACKS - Rather than toking an immediate entry on © signal,than the highast X of the prior X column. Since this point if © revenal is onticipoted ofter a signol, 0 atcaregy invelvingcon be onricipoted, 0 stop order to enter thy position can be bots siak is te toke the position ofter tha signol byt ot a pricapleced of the buy point, loser to the step,
SELL SIGNAL - Occur when 0 column of Or declines one bon bo~low the lowest On the prior © coluenn.
COVER POINT FOR A SHORT - Exoctly the some point a the buysignal, Since this poire con he determined in edvonce, ©stop-lows order to cover should he in the marker,
CLOSEOUT OF A LONG - Exoctly the some point ax the sell signal.
DAILY CHART UPDATING
AF THE CURRENT COLUMN IS AN X COLUMN - Look fint of thedally high. If the doily high permit the drowing of one ormote X's, drow tham ond Ignore the daily low. If, and only
ORDERS = Since oll entey ond stop-loss points ca bo determinedptiot to the occurrence, entry and cloteout step orders can‘be ploced beforehand In the marker. But remember, thesesignal polnes chonge ond oll orders shauid bo perledicallyreviewed ond edjutted,
TRADITIONAL ENTRY SIGNALS - The fint buy signal following‘one of more seli-shost signols and the find sell-short signalFallaving one ot more buy signals,
BULLISH « if the most recont signal was 0 buy signal, the potition
ix bullish ond remoins bull ah until © sell-short signel occun,,
BEARISH = [5 the mast recon? signal wen o aeil-short tignel, the
patition is bearish and romoins beatiah untll © buy tigneloccur.
If, no new Xs can be drawn, look ot the doily low and deter>mine wharhar reversal hos ocevered. {f 0 reversal hos notoccurred, make no entries of all.
WP THE CURRENT COLUMN IS AN © COLUMN = Look fint of the
dolly low, If the deity low permits the drowing of ane or moreOr, dram tham and ignore the daily high. If, and only il, noew Or con be drawn, look ot tha doily higk to determinewhethat 0 reversal hes occerred. fa revanal hes occureddraw tha appropriate number of Xs, If 0 ceavenal hot notoccurred, mabe na entries ot all,
There con navar be Xs and Or drawn on the some dey. Onodeily basis there is either © cantinuation of the current column,© reversol, oF no new entries ote made,
 
 
Figure 11.8 Source: Courtesy of Chartcraft, Inc., New Rochelle, NY.280 Chapter 11
 
Chart Patterns
Figure 11.9 shows 16 price patterns most common to this type ofpoint and figure chart—8 buy signals and 8 sell signals.
Let’s take a look at the patterns. Since column 2, showingsignals S-1 through S-8, is just a mirror image of column 1, we'llconcentrate on the buy side. The first 2 signals, B-1 and B-2, aresimple formations. All that is required for the simple bullish buysignal is 3 columns, with the second column of x’s moving 1 boxabove the previous column of x’s. B-2 is similar to B-1 with oneminor difference—there are now 4 columns, with the bottom ofthe second column of o’s higher than the first. B-1 shows a sim-ple breakout through resistance. B-2 shows the same bullishbreakout but with the added bullish feature of rising bottoms. B-2 is a slightly stronger pattern than B-1 for that reason.
The third pattern (B-3), breakout of a triple top, begins thecomplex formations. Notice that the simple bullish buy signal isa part of each complex formation. Also, as we move down thepage, these formations become increasingly stronger. The tripletop breakout is stronger because there are 5 columns involvedand 2 columns of x’s have been penetrated. Remember that thewider the base, the greater the upside potential. The next pat-tern (B-4), ascending triple top, is stronger than B-3 because thetops and bottoms are both ascending. The spread triple top (B-5)is even stronger because there are 7 columns involved, and 3columns of x’s are exceeded.
The upside breakout above a bullish triangle (B-6) combinestwo signals. First, a simple buy signal must be present. Then theupper trendline must be cleared. (We'll cover the drawing oftrendlines on these charts in the next section). Signal B-7, upsidebreakout above a bullish resistance line, is self-explanatory. Again,two things must be present. A buy signal must have already beengiven; and the upper channel line must be completely cleared.The final pattern, the upside breakout above a bearish resistance line(B-8), also requires two elements. A simple buy signal must becombined with a clearing of the down trendline. Of course, every-thing we’ve said regarding patterns B-1 through B-8 applies equal-ly to patterns S-1 through S-8 except that, in the latter case, pricesare headed down instead of up.Point and Figure Charting 281
BUY SIGNALS SELL (SHORT SALE) SIGNALS
Simple Formations |
 
 
 
 
 
 
PettH 4 alHet Poa‘2 SIMPLE BULLISH BUY SIGNAL 4WITH ARISING BOTTOMpee TEH Complex Formations pa torote : ‘$3 BREAKOUT OF A TRIPLE ++ peteBag oeE Ee Fe =
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 11.9 Source: K.C. Zieg, Jr., and P.J. Kaufman, Point and FigureCommodity Trading Techniques (New Rochelle, NY: Investors Intelligence)p. 73.282 Chapter 11
There is a difference between how these patterns are applied tocommodity markets as opposed to common stocks. In general, all 16signals can be used in stock market trading. However, because ofthe rapid movement so characteristic of the futures markets, thecomplex patterns are not as common in the commodity markets.Much greater emphasis is therefore placed on the simple signals.Many futures traders utilize the simple signals alone. If the traderchooses to wait for the more complex and stronger patterns,many profitable trading opportunities will be missed.
THE DRAWING OF TRENDLINES
In our discussion of intraday charts, it was pointed out that trend-lines were drawn in the conventional way. This is not the case onthese 3 point reversal charts. Trendlines on these charts are drawnat 45 degree angles. Also, trendlines do not necessarily have toconnect previous tops or bottoms.
The Basic Bullish Support Line and BearishResistance Line
These are your basic up and down trendlines. Because of thesevere condensation on these charts, it would be impractical totry to connect rally tops or reaction lows. The 45 degree line is,therefore, used. In an uptrend, the bullish support line is drawn ata 45 degree angle upward to the right from under the lowest col-umn of o’s. As long as prices remain above that line, the majortrend is considered to be bullish. In a downtrend, the bearishresistance line is drawn at a 45 degree angle downward to theright from the top of the highest column of x’s. As long as pricesremain below that down trendline, the trend is bearish. (SeeFigures 11.10-11.12.)
At times, those lines may have to be adjusted. For example,sometimes a correction in an uptrend breaks below the rising sup-port line after which the uptrend resumes. In such cases, a newsupport line must be drawn at a 45 degree angle from the bottomof that reaction low. Sometimes a trend is so strong that the orig-Point and Figure Charting 283
 
Figure 11.10 Examples of the Chartcraft three point reversal stockcharts. Notice that the trendlines are drawn at 45 degree angles. (Source:Courtesy of Chartcraft, New Rochelle, NY.)284 Chapter 11
 
Figure 11.11 Two more examples of the Chartcraft 3 point reversalmethod of point and figure charting. Trendlines on these charts are drawn at45 degree angles. (Source: Courtesy of Chartcraft, New Rochelle, NY.)Point and Figure Charting 285
 
Figure 11.12 The box to the bottom left shows a horizontal target to 92in British Telecomm PLC arrived at by tripling the base and adding to 50. Tothe right, a vertical target to 102 is arrived at by tripling the x column andadding to 63. (Source: Courtesy of Chartcraft, New Rochelle, NY.)286 Chapter 11
inal up trendline is simply too far away from the price action. Inthat case, a tighter trendline should be drawn in an attempt toarrive at a “best fitting” support line.
MEASURING TECHNIQUES
Three point reversal charts allow the use of two different measur-ing techniques—the horizontal and the vertical. For the horizontal,count the number of columns in a bottom or topping pattern.That number of columns must then be multiplied by the value ofthe reversal or the number of boxes needed for a reversal. Forexample, let’s assign a $1.00 box value to a chart with a 3 boxreversal. We count the number of boxes across a base and comeup with 10. Because we're using a 3 box reversal, the value of thatreversal is $3.00 (3x$1.00). Multiply the 10 columns across thebase by $3 for a total of $30. That number is then added to thebottom of the basing pattern or subtracted from the top of a top-ping pattern to arrive at the price objective.
The vertical count is a bit simpler. Measure the number ofboxes in the first column of the new trend. In an uptrend, mea-sure the first up column of x’s. In a downtrend, measure the firstdown column of o’s. Multiply that value by 3 and add that totalto the bottom or subtract it from the top of the column. Whatyou're doing in effect with a 3 box reversal chart is tripling thesize of the first leg. If a double top or bottom occurs on the chart,use the second column of o’s or x’s for the vertical count. (SeeFigure 11.12.)
TRADING TACTICS
Let’s look at the various ways that these point and figure chartscan be used to determine specific entry and exit points.1. A simple buy signal can be used for the covering of oldshorts and/or the initiation of new longs.
2. A simple sell signal can be used for the liquidation of oldlongs and/or the initiation of new shorts.Point and Figure Charting 287
 
3. The simple signal can be used only for liquidation purpos-es with a complex formation needed for a new commit-ment.
4, The trendline can be used as a filter. Long positions aretaken above the trendline and short positions below thetrendline.
5. For stop protection, always risk below the last column ofo’s in an uptrend and over the last column of x’s in adowntrend.
6. The actual entry point can be varied as follows:a. Buy the actual breakout in an uptrend.
b. Buy a 3 box reversal after the breakout occurs to obtaina lower entry point.
c. Buy a 3 box reversal in the direction of the originalbreakout after a correction occurs. Not only does thisrequire the added confirmation of a positive reversal inthe right direction, but a closer stop point can now beused under the latest column of o’s.
d. Buy a second breakout in the same direction as the orig-inal breakout signal.
As you can readily see from the list, there are many dif-ferent ways that the point and figure chart can be used. Oncethe basic technique is understood, there is almost unlimitedflexibility as to how to best enter and exit a market using thisapproach.
Adjusting Stops
The actual buy or sell signal occurs on the first signal. However, asthe move continues, several other signals appear on the chart.These repeat buy or sell signals can be used for additional posi-tions. Whether or not this is done, the protective stop point canbe raised to just below the latest o column in an uptrend and low-ered to just over the latest x column in a downtrend. This use ofa trailing stop allows the trader to stay with the position and pro-tect accumulated profits at the same time.288 Chapter 17
What to Do After a Prolonged Move
Intermittent corrections against the trend allow the trader toadjust stops once the trend has resumed. How is this accom-plished, however, if no 3 box reversals occur during the trend?The trader is then faced with a long column of x’s in an uptrendor o’s in a downtrend. This type of market situation creates whatis called a pole, that is, a long column of x’s and o’s without a cor-rection. The trader wants to stay with the trend but also wantssome technique to protect profits. There is at least one way toaccomplish this. After an uninterrupted move of 10 or moreboxes, place a protective stop at the point where a 3 box reversalwould occur. If the position does get stopped out, reentry can bedone on another 3 box reversal in the direction of the originaltrend. In that case, an added advantage is the placement of thenew stop under the most recent column of o’s in an uptrend orover the latest column of x’s in a downtrend.
ADVANTAGES OF POINT ANDFIGURE CHARTS
Let’s briefly recap some of the advantages of point and figurecharting.
1. By varying the box and reversal sizes, these charts can beadapted to almost any need. There are also many differentways these charts can be used for entry and exit points.
2. Trading signals are more precise on point and figure chartsthan on bar charts.
3. By following these specific point and figure signals, bettertrading discipline can be achieved. (See Figures 11.13-11.18.) 
(TR1600) Treasury Bonds 1600
Point & Figure Chart (.5x3)
 
 
 
 
raze “an? “ore “1210 "1906 2729 “327 soe erie
Trst_—1008 Tene “too? aid, 7a “ais 028 vee
 
Figure 11.13 = This chart of Treasury Bond futures prices covers morethan two years. The arrows mark the buy and sell signals. Most of the sig-nals captured the market trend very well. Even when a bad signal is given,the chart quickly corrects itself.
 
par1303 (UD1599) U.S. Dollar Index Cash
 
Point & Figure Chart (.5x3)
 
 
 
oor tees "wen aty“taav1908 "wor tees “toze 1907 "gos eat yag? 19s.
 
 
Figure 11.14 = The early 1994 sell signal (first down arrow) lasted all theway through 1994. The buy signal at the start of 1995 (first up arrow) last-
ed for two years until 1997. A sell signal in mid-1997 tured into a buy atthe start of 1998. 
3 (UD1599) U.S. Dollar index Cash
 
Point & Figure Chart (1x3)
 
 
 
 
 
 
 
 
 
 
 
 
Figure 11.15 = This chart condenses the previous dollar chart by doublingthe box size. Only two signals are given on this less sensitive version. Thelast signal was a buy (see up arrow) in mid-1995 near 85, which has lastedfor almost three years.
 
psr04/03 (GC1600) Gold 1600Point & Figure Chart (5x3)
83
 
&3
 
 
 
 
 
 
BEER e 2 ee SE
 
 
 
 
 
Figure 11.16 This point and figure chart of gold gave a sell signal (seedown arrow) near $380 during 1996. Gold prices fell another $100 over thenext two years. 
psr21197 (L11600) Crude Oil, Light 1600
 
Point & Figure Chart (.25x3)
 
 
 
 
 
 
 
Figure 11.17 = The crude oil point and figure chart gave a sell signal (seedown arrow) near $20 during October 1997 and caught the subsequent $6tumble. Crude oil prices would have to rise above the last x column at 16.50to reverse the downtrend.
 
brreares (SOX) Phix Semiconductor index
 
Point & Figure Chart (10x3)
88 £2 8 8 8
 
 
 
 
ao2"e2s “e2s 10s 1906 "ety “ies? “ait “srz8 “ane
 
Figure 11.18 — This point and figure chart of the Semiconductor Index gavefour signals over a period of two and a half years. The down arrows mark twotimely sell signals in 1995 and 1997. The buy signal during 1996 (first upatrow) caught most of the ensuing rally.292 Chapter 11
P&F TECHNICAL INDICATORS
In his 1995 book, Point & Figure Charting John Wiley & Sons),Thomas J. Dorsey espouses the Chartcraft method of 3 point rever-sal charting of stocks. He also discusses point and figure applica-tion to commodity and options trading. In addition to explaininghow to construct and read the charts, Dorsey also shows how theP&F technique can be applied to relative strength analysis, sectoranalysis, and in the construction of an NYSE Bullish Percent Index.He shows how p&f charts can be constructed for the NYSE advancedecline line, the NYSE High-Low Index, and the percentage ofstocks over their 10 and 30 week averages. Dorsey credits MichaelBurke, the publisher of Chartcraft, (Chartcraft, Inc., InvestorsIntelligence, 30 Church Street, New Rochelle, N.Y. 10801) with theactual development of these innovative p&f indicators which areavailable in that chart service.
COMPUTERIZED P&F CHARTING
Computers have taken the drudgery out of point and figure chart-ing. The days of laboriously constructing columns of x’s and o'sare gone. Most charting software packages do the charting foryou. In addition, you can vary the box and reversal sizes with akeystroke to adjust the chart for shorter or longer term analysis.You can construct p&f charts from real-time (intraday) and end ofday data, and you can apply them to any market you want. Butyou can do a lot more with a computer.
Kenneth Tower (CMT), technical analyst for UST SecuritiesCorporation, (5 Vaughn Drive, CN5209, Princeton, N.J. 08543) usesa logarithmic method of point and figure charting. A screeningprocess that measures the volatility of a stock over the last 3 yearsdetermines the right percentage box size for each stock. Figures11.19 and 11.20 show examples of Tower’s logarithmic p&f chartsapplied to America Online and Intel. The box size for AOL in Figure11.19 is 3.6%. A 1 box reversal, therefore, would require a retrace-ment of 3.6%. Since that happens to be a 2 box reversal chart, priceswould have to retrace 7.2% to start a new column. Each box size forthe Intel chart shown in Figure 11.20 is worth 3.2%.Point and Figure Charting 293
 
 
 
 
Sernndarv Rasee7 >
 
Figure 11.19 A logarithmic point and figure chart of America Online.The reversal criteria is based on percentages. Each box is worth 3.6%. Sincethis is a two box reversal chart, a reversal is worth 7.2%. Notice the horizon-tal upside counts to 69.7 and 136.5 (see arcs). (Chart courtesy of USTSecurities Corp.)
 
 
 
 
 
 
 
Figure 11.20 A one box reversal point and figure chart of Intel using per-centages. A reversal of 3.2% is needed to move into the next column. Measuringhorizontally from right to left along the base, upside counts can be made to 33and then to 87.6 (see arcs). (Chart courtesy of UST Securities Corp.)294 Chapter 17
The arcs you see on both charts are examples of using hor-izontal price counts across a price base to arrive at short and longterm price objectives. The Intel chart, for example, shows a shortterm objective to 33, arrived at by measuring halfway across theprice base (lower arc). The larger arc, which measures to 87.6, isarrived at by measuring across the entire price base and projectingthat distance upward. If you look closely at Figures 11.19 and11.20, you'll also see price dots trailing the price action. Thosedots happen to be moving averages.
P&F MOVING AVERAGES
Moving averages are usually applied to bar charts. But here theyare on point & figure charts, courtesy of Ken Tower and USTSecurities. Tower uses two moving averages on his charts, a 10 col-umn and a 20 column moving average. The dots you see inFigures 11.19 and 11.20 are 10 column averages. These movingaverages are constructed by first finding an average price for eachcolumn. That is done by simply adding up the prices in each col-umn and dividing the total by the number of x’s or o’s in that col-umn. The resulting numbers are then averaged over 10 and 20columns. The moving averages are used in the same way as on barcharts.
Figure 11.21 shows two point and figure charts of the samestock with 10 column averages (dots) and 20 column averages(dashes). The bottom chart is a 2.7% reversal logarithmic chart ofRoyal Dutch Petroleum going back to 1992. Notice that the fastermoving average stayed above the slower moving average from1993 to the 1997 during the four year uptrend. You can see thetwo moving averages coming together during the second half of1997 in what turned out to be a consolidation year for that stock.To the far right, you can see that Royal Dutch may be on the vergeof resuming its major uptrend. A closer look at that potentialupside breakout is seen in the upper chart in Figure 11.21.
The upper chart is a traditional one point reversal linearchart of the same stock. The time frame covered in the linearchart is much shorter than the long chart. But you get a closerlook at the late 1997 and early 1998 price action and can see thePoint and Figure Charting 295
 
 
2.7% Reversal Logerithmic
 
 
2+7" 10 Gokimn Moving Average --- 20 Column Moving Average omer Major
 
Figure 11.21 Two point and figure versions of Royal Dutch Petroleum.The bottom chart is a log chart spanning several years. The upper chart is alinear chart for one year. The dots and dashes represent 10 and 20 columnmoving averages, respectively. (Prepared by UST Securities Corp. Updatedthrough March 26, 1998.)296 Chapter 11
 
short term upside breakout at the start of 1998. The stock stillneeds to close through 60 to confirm a major bullish breakout.The moving averages haven’t been much help during the tradingrange (they never are), but should begin to trend higher onceagain if the bullish breakout materializes. By adding moving aver-ages to point and figure charts, Ken Tower brings another valuabletechnical indicator to p&f charting. The use of logarithmic chartsalso adds a modern wrinkle to this old charting method.
CONCLUSION
Point and figure charting isn’t the oldest technique in the world.That credit goes to the Japanese candlestick chart, which has beenused in that country for centuries. In the next chapter GregMorris, author of two books on candlesticks, will introduce thatancient technique that has gained new popularity in recent yearsamong Western technical analysts. 
INTRODUCTION
While the Japanese have used this charting and analysis tech-nique for centuries, only in recent years has it become popular inthe West. The term, candlesticks, actually refers to two different,but related subjects. First, and possibly the more popular, is themethod of displaying stock and futures data for chart analysis.Secondly, it is the art of identifying certain combinations of can-dlesticks in defined and proven combinations. Fortunately, bothtechniques can be used independently