What is a P&F Pole?

P&F Pole is single-column patterns that signal supply or demand in a stock. This pattern consists of two key components:

• A bullish or bearish breakout with more than five boxes beyond the breakout level.

• A retracement exceeding 50% of the previous column.

Pole is categorized based on its formation. A High Pole occurs after a Double-Top Buy pattern, while a Low Pole forms after a Double-Bottom Sell pattern.

What does a Pole convey?

High Pole is a bearish pattern, and Low Pole is a bullish pattern.

A High Pole is recognized as a supply pattern because it signifies that after a strong bullish breakout (signified by the 5 boxes after breakout), the price has retraced deeply, erasing more than half of the demand from the preceding column of X.

A Low Pole is recognized as a demand pattern because it signifies that after a strong bearish breakout (signified by the 5 boxes after breakout), the price has retraced deeply, gaining more than half of the supply from the preceding column of O.

How to use Poles?

Poles in themselves are not a tradable pattern. They are best used for analysis of an instrument’s trend and analyzing important support or resistance price points.

Poles in trend analysis:

Poles serve as a clear indication of demand or supply, forming at key points during strong trends.

• In a bullish trend, the price should create higher Low Poles, while any High Pole will be negated.

• In a bearish trend, the price should form lower High Poles, while any Low Pole will be negated.

Observe the ABB chart below, where Low Poles (green) and High Poles (red) are marked. In the uptrend, the Low Pole remained intact, while the High Pole was breached multiple times, indicating supply absorption and underlying demand.

The CUMMINSIND chart highlights a similar pattern. But, in the shaded region, the price remains below the Double Moving Average, indicating no clear trend. During this phase, even a Low Pole was breached. However, once the trend was established, higher Low Poles formed and remained intact.

Poles as Support and Resistance points

Support and resistance levels reflect strong demand and supply, respectively. Low Poles around a specific price level can act as support, while High Poles can serve as resistance.

When the price revisits a level with multiple Low Poles, it is likely to act as support, whereas a level with multiple High Poles can serve as resistance.

The Principle of Polarity also applies here. If the price breaks below a level with multiple Low Poles, that level is likely to act as resistance. Conversely, if the price breaks above a level with multiple High Poles, it is likely to turn into support.

Poles are an effective tool for identifying supply and demand zones, but they can also be traded. When combined with other indicators, they offer a more comprehensive analysis. A notable variation, the 100% Pole, signals significant supply or demand shifts. To learn how to trade Poles and recognize their failures, explore the How to Trade Point and Figure course on The Noiseless Trader website. If you have a TNT One subscription, you can revisit the course anytime. If not, consider exploring the subscription through the link below.