Point & Figure Chart

Point and Figure (P&F) charts display day-to-day price movements without taking into consideration the passage of time. Point and Figure charts are composed of a number of columns that either consist of a series of stacked Xs or Os.

Point and Figure (P&F) charts

Point and Figure (P&F) charts display day-to-day price movements without taking into consideration the passage of time. Point and Figure charts are composed of a number of columns that either consist of a series of stacked Xs or Os. A column of Xs is used to illustrate a rising price, while Os represent a falling price.

 

Point & Figure Chart Calculation

Point and figure charts are constructed as follows:

  • Price movements are plotted in columns of X's and O's.
  • Each X represents a positive price movement based on a user-selected price 'box'. 
  • If the plot is in a column of X's and the daily high price exceeds the previous x by at least the box number, then 1 or more X 's are added to the column (an X for each box over the previous X).
  • If the daily high price is above the current X, but less than the box price, the plot doesn't change.
  • If you are in a column of  X's and the daily low is more than the 'reversal' amount, then you move to a column of O's.
  • Each O represents a negative price movement based upon the box price.
  • The O column functions similarly, but with respect to price decreases (e.g. if today's low is less than the previous O minus one box, new O's are plotted, etc.).


Point & Figure Chart Interpretation

This type of chart is used to filter out non-significant price movements, and enables the trader to easily determine critical support and resistance levels as shown in the chart below.

Point and Figure chart showing long term trends


Point and Figure charts reduce complex price oscillations to a simple format which only displays significant price moves, providing an extremely insightful view of the price movement.

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