Support lines tend to act like brick walls. We learned that from our friend and point and figure charting expert Tom Dorsey. This has proven to be true time and time again. On this video, Tom shows the bullish support line’s power through an example.
Brendan described how the bullish support line is determined on a previous video. If you missed that one, we recommend checking it out. Bullish support lines are a key component to any point and figure chart. They allow us to determine the security’s trend. Securities trading above their bullish support line are considered to be in a positive trend. Securities trading below their bullish support line are considered to be trading in a negative trend. Bad things tend to happen in negative trends, and we believe that (most of the time) it makes sense to avoid making investments in negatively trending securities.
Bullish support lines and point and figure charts are not perfect. If you’re looking for the perfect investment strategy, good luck. There aren’t any. However, we believe focusing on investments in positive trends is a great way to stack the odds in your favor.