What is 'Count'

Count is a form of technical analysis that employs point and figure (P&F) charts to evaluate the vertical movement of stock prices.


Count analysis uses Xs to represent price increases and Os for price decreases. Analysts base count calculations on historical sideways price movements and use them to determine the probability that a price target can be reached. Count analysis Xs and Os are used with a traditional scale and a previously determined reversal amount. Traders use this to determine if certain positions are profitable. Investors can review the sequence of price fluctuations to estimate how prices are likely to move in the future. There are several count methods, such as the  breakout count method that is used to find a bullish price objective must be used with an active P&F buy signal.

There are four steps to this method. First, the most active sell signal, known as a  Double Bottom Breakdown, must be found on the P&F chart, working from right to left. Next, working to the right of this signal, the next buy signal, the Double Top Breakout, must be found. The column producing this signal is key because it becomes the measure column. Then, the height of the measure column must be calculated and multiplied by the box reversal amount. Finally, the total of this calculation must be added to the low of the column to the left of the measure column.

Other Count Methods

The reversal count method may be used to find bullish as well as bearish price objectives. There are three steps used to find bullish prices. The reversal count must be used with an active P&F buy signal. First, working from left to right, the most recent P&F sell signal must be found. The X column next to the sell signal becomes the measure column. Next, the height of the column must be calculated and multiplied by the box reversal amount. Then, the total must be added to the low of the column to the left of the measure column.

For the horizontal count method, a congestion pattern or reversal must form on a P&F chart. The congestion pattern needs to be a minimum of five columns wide and must have a column that breaks the congestion. The columns in this pattern are be counted. This is the width. After the breakout column occurs on the P&F chart, analysts can multiply the width by the box size and the reversal amount to estimate price extension. The extension is added to the low of the pattern for a price objective.

  1. Box Size

    Box size is the minimum price change that must occur before the ...
  2. Sell Signal

    A sell signal is a condition or measurable level at which an ...
  3. Buy Signal

    A buy signal is an event or condition that alerts a person to ...
  4. Reversal

    A change in the direction of a price trend. On a price chart, ...
  5. Double Top

    A double top is a chart pattern, characterized by two consecutive ...
  6. Triple Top

    The triple top pattern is a type of chart pattern used in technical ...
Related Articles
  1. Trading

    Testing Point-and-Figure Patterns

    Learn the patterns that will help you pinpoint and profit from breakouts.
  2. Trading

    Is It A Breakout? See The Point-And-Figure Chart

    These stocks have broken out of a triple top formation using point-and-figure charting, a bullish sign.
  3. Investing

    Point And Figure Charting Basics

    Learn how to construct and read these price charts designed to highlight entry and exit points for longer-term positions.
  4. Trading

    Technical Analysis: Triple Tops and Bottoms

    Triple and double tops and bottoms may be tough to spot but can be powerful patterns.
  5. Investing

    Market reversals and how to spot them

    Learn what market reversals are and how to spot them. The sushi-roll indicator may help lower the risk of trying to pick market tops and bottoms.
  1. Can you calculate the marginal tax rate in Excel?

    Learn how to approximate taxes owed and if Excel and marginal tax rate data provide an accurate number for personal tax calculation. Read Answer >>
  2. What is the Volatility Ratio formula and how is it calculated?

    Understand what the volatility ratio indicator is, how it is calculated and the way this technical indicator is used by traders ... Read Answer >>
  3. How can you calculate diminishing marginal returns in Excel?

    Learn more about production costs and applying the law of diminishing marginal returns using Excel. Find out more about how ... Read Answer >>
  4. How do I identify a stock that is under consolidation?

    Discover the three major characteristics stocks or securities exhibit when they are trading under a period of price consolidation. Read Answer >>
  5. What are the differences between patterns and trends?

    Learn the difference between a pattern and a trend. Explore how technical analysts use patterns and trends to identify trading ... Read Answer >>
Hot Definitions
  1. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  2. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  3. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  4. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  5. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  6. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
Trading Center