A PHP Error was encountered

Severity: Warning

Message: count(): Parameter must be an array or an object that implements Countable

Filename: controllers/Home.php

Line Number: 709

Importance of P&F multi column breakout
  • : December 18, 2016
  • : Prashant Shah


P&F bullish multi column breakout formation can be defined as column of X going above previous multiple columns. P&F triple top bullish formation is one such pattern where column of X goes above previous two columns of X happened to be at similar level. See image shown below.

17 Dec P&F

Such type of P&F Multi-column breakout formation when found in higher box value such as 3%  shows breakout after significant consolidation phase.

For example, below is a 3% x 3 P&F chart of AIA engineering showing bullish triple top P&F formation.

17 dec

A column of P&F represent a swing move consisting many of number of days. The five column triple buy formation shown in the chart is of 1 year duration! To understand it better, below is the line chart showing same formation.

PF

When such kind of multi-column breakout is found on a higher box value P&F chart, the multi-period consolidation on line or bar chart may have rounding bottom, simple or complex inverted head & shoulder or cup - handle formation, rectangle formation etc. In brief, breakout after such kind of long congestion is a significant observation. Stocks having this kind of patterns may have come out from accumulation phase hence need further investigation.

If the formation can be defined in such simple manner, the job of scanning to look for them becomes easy. I ran query for Nifty-500 group stocks to share few more such charts.

Below is a daily bar chart and 3% x 3 P&F chart of Shilpa medicare showing similar setup. The 6 month consolidation when broken out, formed Triple top buy formation in P&F chart.

PF

Below are charts of Bhartforg showing similar formation. P&F formation is a multi-column breakout and a variation of triple top buy formation.

17 dec

Why 3%? It shows big picture and larger degree price structure.  Higher than 3% box values can also be utilised to analyse the same.  Below is 3% and 5% box value P&F chart of VST industries shown along with weekly line chart.

17 dec

There is 20 month consolidation breakout shown by 3% x 3 chart as triple top formation. But 5% box value chart shows multi-column breakout (6 X breakout) from more than 4.5 years consolidation formation!!

Image shown below is a BEL bar chart and 5% box value P&F chart showing similar picture.

17 dec

Charts shown below is a weekly bar and 7% box value P&F of Sonata software showing 20 month rectangle formation.

17 dec

Below is a weekly line chart and 10% box value P&F chart of SBBJ. The chart shows 5 year formation where multi period breakout occurred and retracement to the neck line is also shown on P&F chart.

17 dec

Above charts exhibits utility of multi-column breakouts on higher box-value P&F charts. Larger structure is shown by few column obective setups and most importantly, scanning becomes simple.They can be scanned on regular basis and further techniques of analysis on the list of stocks derived from it can be applied. Breakouts also open P&F counts but not shown in the above charts because they are easily treated as targets which is not their only usefulness. P&F analysis becomes very useful to apply the filters further and to trade the lower box-value or time frame (pattern cluster) charts of the same stocks. 

With P&F we try to make every observation objective, so that it can be scanned and tested. If formation is objective, performance can be tested on past data. The utilisation of higher box value P&F charts is not limited to multi-column breakout formation only. Below is a 3% x 3 P&F chart of Sunpharma showing 1 year triangular formation that represents convergence. 

PF

Next thread will talk about converging formations on different box-values and their usefulness. 
 
Please note that these are not the recommendations and all charts are only for educational purpose. Check for liquidity, fundamental factors and other such things before investing.