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Projecting Price Target
One of the biggest advantages of Point and Figure charts is 'the count', as it is called, which is the ability to project price targets from the chart. As with 45° trend lines, these counts are objective. They are potential targets that give the analyst an idea as to how far the price can go. It is important to stress the word 'potential'. These targets are a rough estimate.
Two methods are used to establish price targets: horizontal and vertical counts. 3-box reversal charts allow both vertical and horizontal counts, whereas 1-box charts allow horizontal only. We will discuss each of them in our subsequent units.
