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   Point n Figure (PnF Charts) - Technical Analysis from A to Z     
POINT AND FIGURE

Overview

Point & Figure ("P&F") charts differ from traditional price charts in that they completely disregard the passage of time and only display changes in prices. Rather than having price on the y-axis and time on the x-axis, P&F charts display price changes on both axes. This is similar to Kagi, Renko, and Three Line Break charts.

Interpretation

Point & Figure charts display the underlying supply and demand of prices. A column of Xs shows that demand is exceeding supply (a rally); a column of Os shows that supply is exceeding demand (a decline); and a series of short columns shows that supply and demand are relatively equal.

There are several chart patterns that regularly appear in P&F charts. These include Double Tops and Bottoms, Bullish and Bearish Signal formations, Bullish and Bearish Symmetrical Triangles, Triple Tops and Bottoms, etc. It is beyond the scope of this book to fully explain all of these patterns.

Example

The following two charts both show the prices of Atlantic Richfield. The first chart displays prices in P&F, the second chart displays prices as high, low, close bars.

As I mentioned above, P&F charts focus only on price action. Looking at this P&F chart, you can see that prices were initially contained between a support level at 114 and a resistance level at 121. When prices broke above the resistance level at 121 (the long column of Xs), that level became the new support level. This new support level eventually failed (the long column of Os), prices re-tested the support at 114, made a small rally, and then fell below the 114 support level.

This next chart shows the same pricing information as the preceding P&F chart. You can see that the support and resistance levels are also identifiable in this bar chart, but the P&F chart made it much easier to identify them.

Calculation

Point & Figure charts display an "X" when prices rise by the "box size" (a value you specify) and display an "O" when prices fall by the box size. Note that no Xs or Os are drawn if prices rise or fall by an amount that is less than the box size.

Each column can contain either Xs or Os, but never both. In order to change columns (e.g., from an X column to an O column), prices must reverse by the "reversal amount" (another value you specify) multiplied by the box size. For example, if the box size is three points and the reversal amount is two boxes, then prices must reverse direction six points (three multiplied by two) in order to change columns. If you are in a column of Xs, the price must fall six points to change to a column of Os. If you are in a column of Os, the price must rise six points to change to a column of Xs.

The changing of columns identifies a change in the trend of prices. When a new column of Xs appears, it shows that prices are rallying higher. When a new column of Os appears, it shows that prices are moving lower.

Because prices must reverse direction by the reversal amount, the minimum number of Xs or Os that can appear in a column is equal to the "reversal amount."

The common practice is to use the high and low prices (not just the close) to decide if prices have changed enough to display a new box.

 


Point and Figure Patterns Stock Screener Action
 P&F Buy   Customize Screen   Backtest Screen   Trade Alert  
 P&F Sell   Customize Screen   Backtest Screen   Trade Alert  
 Double Bottom   Customize Screen   Backtest Screen   Trade Alert  
 Double Top   Customize Screen   Backtest Screen   Trade Alert  
 Triple Bottom   Customize Screen   Backtest Screen   Trade Alert  
 Triple Top   Customize Screen   Backtest Screen   Trade Alert  
 Bullish Catapult   Customize Screen   Backtest Screen   Trade Alert  
 Bearish Catapult   Customize Screen   Backtest Screen   Trade Alert  
 Inverted Head and Shoulders   Customize Screen   Backtest Screen   Trade Alert  
 Head and Shoulders   Customize Screen   Backtest Screen   Trade Alert  
 Ascending Triangle Breakout   Customize Screen   Backtest Screen   Trade Alert  
 Descending Triangle Breakout   Customize Screen   Backtest Screen   Trade Alert  
 Symmetrical Triangle Bullish Breakout   Customize Screen   Backtest Screen   Trade Alert  
 Symmetrical Triangle Bearish Breakout   Customize Screen   Backtest Screen   Trade Alert  
 Long Tail Down Reversal   Customize Screen   Backtest Screen   Trade Alert  
 Long Tail Up Reversal   Customize Screen   Backtest Screen   Trade Alert  
 Bear Trap   Customize Screen   Backtest Screen   Trade Alert  
 Bull Trap   Customize Screen   Backtest Screen   Trade Alert  

 

 Preface
Preface
Introduction
Acknowledgments
Terminology
To Learn More


 Content
Technical Analysis
Price Fields
Charts
Support & Resistance
Trends
Moving Averages
Indicators
Market Indicators
Line Studies
Periodicity
The Time Element
Conclusion

 Reference
 Reference
 Absolute Breadth Index
 Accumulation/Distribution
 Accumulation Swing Index
 Advance/Decline Line
 Advance/Decline Ratio
 Advancing-Declining Issues
 Advancing, Declining,
   Unchanged Volume

 Andrews' Pitchfork
 Arms Index
 Average True Range
 Bollinger Bands
 Breadth Thrust
 Bull/Bear Ratio
 Candlesticks, Japanese
 CANSLIM
 Chaikin Oscillator
 Commodity Channel Index
 Commodity Selection Index
 Correlation Analysis
 Cumulative Volume Index
 Cycles
 Demand Index
 Detrended Price Oscillator
 Directional Movement
 Dow Theory
 Ease of Movement
 Efficient Market Theory
 Elliott Wave Theory
 Envelopes (Trading Bands)
 Equivolume
 Fibonacci Studies
 Four Percent Model
 Fourier Transform
 Fundamental Analysis
 Gann Angles
 Herrick Payoff Index
 Interest Rates
 Kagi
 Large Block Ratio
 Linear Regression Lines
 MACD
 Mass Index
 McClellan Oscillator
 McClellan Summation Index
 Median Price
 Member Short Ratio
 Momentum
 Money Flow Index
 Moving Averages
 Negative Volume Index
 New Highs-Lows Cumulative
 New Highs-New Lows
 New Highs/Lows Ratio
 Odd Lot Balance Index
 Odd Lot Purchases/Sales
 Odd Lot Short Ratio
 On Balance Volume
 Open Interest
 Open-10 TRIN
 Option Analysis
 Overbought/Oversold
 Parabolic SAR
 Patterns
 Percent of Resistance
 Percent Retracement
 Performance
 Point & Figure
 Positive Volume Index
 Price and Volume Trend
 Price Oscillator
 Price Rate-of-Change
 Public Short Ratio
 Puts/Calls Ratio
 Quadrant Lines
 Relative Strength, Comparative
 Relative Strength Index
 Renko
 Speed Resistance Lines
 Spreads
 Standard Deviation
 STIX
 Stochastic Oscillator
 Swing Index
 Three Line Break
 Time Series Forecast
 Tirone Levels
 Total Short Ratio
 Trade Volume Index
 Trendlines
 TRIX
 Turn Price
 Typical Price
 Ultimate Oscillator
 Upside/Downside Ratio
 Upside-Downside Volume
 Vertical Horizontal Filter
 Volatility, Chaikin's
 Volume
 Volume Oscillator
 Volume Rate-of-Change
 Weighted Close
 Williams' Accumulation/Distribution
 Williams' %R
 Zig Zag

 Author
Bibliography
About the Author

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