1. First note that this is a long term chart. The procedure works in the short term too but not with the same reliability.

2. You are correct in saying the uptrending curve is support.

3. How serious is a failure - good question. A failure represents a change in the shorter term trend and should be sold. Very likely you will be able to get back in at a reduced price. The fundamentals have not changed. It is still a bull market. Sinclair speaks of selling a third into the price rises, and then buying back in at a lower basis. But realize that the placement of the french curve continually shifts based on each of the failures (and new low points) of which you speak. It is an ongoing analysis. For example the curve following the line and runup into the spring of 06 would have been tracking that rhino horn and would have been sold right near the top when the rhino horn pattern broke down in the 650 -700 range. You would then have repurchased your third somewhere in the 550 - 600 range. The next vertical ascent to track occurred in the spring of 08. When that rhino horn broke down one would probably have sold at about 900 (that did not make the degree of vertical the 06 run did so you would have to stay in until you broke through the support line and you didn't capture as much) but you would would have bought back in the 700 - 850 range.

4. The 700 point which now marks the bottom of the trendline did not exist in the 06 - 08 range runup. Try to envision the curve that would have fit then to see what I am saying.

5. In time more points will be added to this current runup or the pattern will produce another lower low which will call for a straighter trendline that will go off further into the future. As time passes more points will be added to this current situation and its top will be predictable. It will in its turn develop its own rhino horn which will be tradeable and then a new low which may alter the picture for what 2012 holds.

6. So the process is ongoing. The picture given here may be stretched out further, but further relates to higher so don't worry. Eventually a long term picture similar to that shown in the chart will be fulfilled in its finality. Because the system will have taken you out near the top you will have made good profits. The real trick is knowing when it over and when not to buy back in. Usually the runup is so distinctive that the top can be intuitively felt if you are familiar with bubble euphoria.

P.