During a previous video, Tim explained that on point and figure relative strength charts, we care less about patterns and more about column and signal. I recently took some time to describe what the column of a point and figure relative strength chart tells us.
It’s easy to identify what column a point and figure relative strength chart is in. There are only two options: it’s either in a column of X’s or O’s. As simple as this seems, it’s one of the most important attributes we look for on any relative strength chart.
What’s the Significance of a Relative Strength Chart’s Current Column?
A relative strength chart’s current column tells us about the security’s short term performance.
– If it is in a column of X’s, it’s been experiencing near term outperformance
– If it is in a column of O’s, it’s been experiencing near term underperformance
On a similar note, fresh X’s or O’s being added to the same column of a point and figure relative strength chart signifies a continuation of its trend. So additional X’s represent continued outperformance and additional O’s represent continued underperformance.
Just remember that when it comes to the column of a point and figure relative strength chart, we’re learning about its short term performance.