In a previous video, I explained what the column of a point and figure relative strength chart tells us. In this video, I cover what the signal of a point and figure relative strength chart tells us. Both are critical chart components that are not to be overlooked.
It’s important to remember that relative strength charts only have buy signals and sell signals, no patterns like the bullish catapult or bearish triangle. They differ from point and figure trend charts in this way.
When a point and figure relative strength chart is on a buy signal, it indicates longer term outperformance. Conversely, when a point and figure relative strength chart is on a sell signal, it indicates longer term underperformance.
That’s why, when we analyze point and figure relative strength charts, we consider both the current column and signal. The column tells us about the security’s shorter term performance, while the signal tells us about the security’s longer term performance.
You now understand why relative strength charts are such an integral part of our portfolio management strategy.
Further Reading:
http://dorseywrightmm.com/sites/default/files/White%20Paper%20-%20PnF%20RS%20Signals.pdf
