Point and Figure Chart

Point and Figure Chart

It is the oldest types of charts used in technical analysis and chart dates back to point and figure to more than 60 years.

Since ancient traders was trying to track the movement of prices to know the different levels of commodity prices. He began recording prices by investors in the mini notebook, and later the traffickers left those numbers in a different way but it was more effective than the previous ones, have logged those prices way vertical so that writes Price from bottom to top in a way upward while writing prices downward falling in the next column from top to bottom.

In 1947, transformed the way fee price at the hands of (AW.Cohen) where Use the code (X) to express their upward trend and the symbol (O) to express their downward trend, were placed in boxes to be orderly.

Components of the chart point and figure:

The graph consists of two symbols (X) and (O).

Symbol (X) expresses the value of the rising price.

Code (O) expresses the value of bearish.

 Price range (Box Size):

To add (X) or (O) new it would require Price to move a certain number of points, this number determines the value of a specific and this value is called the size of the price range (Box size) this could be a valuable one point or half-point or 50 points.

Example:

If the size of the price range settings 50 points it means that it has to be that the price moves in the same direction the current $ 50 to add a point (X) on the upside or (O) in the downward direction.

In the case of the price moves from level 1150 to level 1200 is added (X) to the column on the upside, which will draw (X) from the 1150 level until 1200, as in the following figure:

But in the case of price movement from the level of 1200 and 1210 to a level not added (X) new to the column and because of that the price did not move a full 50 points from the beginning of the last level of 1200.

Hence, we conclude that the size of the price range (Box size) is determined by the number of points needed to add (X) or (O) to the chart in the same direction.

Over reversal (Reversal size):

The number of points needed to reverse the trend, and to chart a new column (X) or (O) is calculated as follows:

Reversal Box×Box size

Months for the reversal of all known settings are (5.3).

An example of how to prepare reversal (3):

If the size of the price range (Box Size) is equal to 10 and over reflexive equal to 3, if the number of points needed to reverse the trend equal to 30.

If we assume that the price move from level to level 1110 1100 Add handsome (X) to the column on the upside.

Then the price moves from level 1110 to level 1120 Sim Add (X) to the column on the upside.

After that the price moves to level of 1130, ie, 10 points again, and we draw (X) to the column on the upside.

Then the price rose again down to the level of 1130, an increase of 30 points, so we will draw a new upward column (X) from the level of 1100 level until 1130.

Note:

The following figure shows the point chart and number on the program (Accu Chart) with the preparation of the size range 20 points and the extent of reflection 3.

The following figure shows the same price but with the preparation of the size range 50 points and the extent of the reflection 3, note the difference between them.

Note:

Over reflex to prepare (5) deals like setting (3), but the difference of the output equation, ie if the size of the price range (Box Size) is equal to 10 and the reflex is equal to (5), if the number of points needed to reverse the trend equal to 50.