POINT AND FIGURE LIBRARY

The Chart Formations
The Bullish and Bearish Signals

Technical analysts attach particular weight to the fact that a market makes a higher low than a low made on a previous occasion. The inescapable conclusion is that the enthusiasm of the buyers has increased and/or the enthusiasm of the sellers has waned since that previous occasion. It is positive price action.
In its initial formation the bullish signal is nothing more than a double top formation with a higher low.

But in fact as this signal develops, it often has 3,4, or 5 columns of Xs, each rising just above the previous column before selling pushes the stock down again. But each retreat is marked by a higher low.

The converse formation is the bearish signal.

Next: The Bullish Signal Reversed and the Bearish Signal Reversed

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