STOCK GOODIES PLAYS OF THE WEEK

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P&F Catapults Objectives and Risk

The Horizontal Count Method is the preferred method for these patterns. In short, the width of the pattern is multiplied by the box size and reversal amount to form an estimated extension. This is added to the low of a Bullish Catapult or the subtracted from the high of a Bearish Catapult for a Price Objective. Details and examples can be found the ChartSchool. Price Objectives are not hard targets. Instead, they simply provide a guesstimate for an upside or downside objective.

Chartists should also study the chart to assess risk. For example, a move below support or the pattern low would clearly negate a breakout. The box just below the pattern low often marks the worst-case level for a pattern failure. Similarly, a Double Bottom Breakdown or a contradictory P&F pattern would argue for a reassessment. There are sometimes failure clues before price hits the worst-case level. Chartists should also employ other technical analysis techniques to measure risk and monitor the unfolding trend.