But you wait for it to close in a 2 points+ area before you mark the reversal?
Below is a detailed explanation Each 'x' is the price above it and the price below it: the points are the 'areas' that price traveled through to reach the point:
-----below----above X X
-----reverse--below It looks like a regular P&F chart but it is much different.
The chart is plotted as a 1-box reversal chart but it is really a 2 line reversal chart.
Remember when TRO would wait for an hour candle to open within a space and trade in the direction that price crossed a horizontal line? Well that is similar to what we are doing here only now, instead of a bar chart, we are using a simplified history of how price moved through the lines.
If an up column:
1) check to see if the high can make new points
2) check to see if the low can make new points
3) check to see if the close can make a reversal column
PS: it is a good idea to buy a large format printer if you are going to be marking charts by hand...
print off some freekin scrolls, man
, and never run out of room.