THE HAndbook oF TEcHnIcAl AnAlysIsFigure 15.39 Trendlines on a Three‐Box Reversal Point‐and‐Figure Chart of Dell Inc.
Courtesy of Stockcharts.com
in fact represent a bullish formation. Hence, any opposing move that triggers a
subsequent double bottom sell would negate all previous bullish sentiment. We
say that the original bullish signal has now reversed, and the sentiment is now
bearish. This formation requires that the bullish formation be at least seven to
nine columns. The reverse applies for bearish signal reversed. See Figure 15.40.
Figure 15.41 depicts a bearish reversed signal on Alcatel‐Lucent.
the bullish and bearish Fulcrum Formation
The fulcrum pattern is basically a reversal pattern in the form of a congestion
or consolidation area. The use of one‐ or two‐box reversal charts creates a more
visible congestion area as opposed to congestions viewed on three‐box reversal
charts. As prices begin to reverse, triple and double tops begin to get violated,
many times completing single or multiple catapult formations. See Figure 15.42.
high pole/extended Column Warning
A high pole or extended column warning is any retracement of more than 50
percent in the opposite direction of the preceding column of rising Xs. The pole
should preferably be as extended as possible in price, that is, as many Xs as pos-
sible to provide more effective bearish signals. The minimum number of rising
boxes should be at least three or four boxes. A 50 percent retracement from the