Point and Figure
(or P&F) charts pay no attention to time, only showing price changes.
Instead of time on the x axis and price on the y axis, P&F charts
show price changes on both axes, which basically shows the underlying
supply and demand for a security typically using 'X's and 'O's.
A column of Xs suggest a rally (demand is leading supply) while
a column of Os suggests a fall (supply is leading demand). Short
columns imply that supply and demand are fairly matched. Day trading
systems using point and figure techniques are fairly rare, due to
th eneed to learn a new charting method, and become totally familiar
Popular Point and Figure
chart patterns include Double Tops and Bottoms, Bullish and Bearish
Signal formations, Bullish and Bearish Symmetrical Triangles and
so on. To create a Point and Figure chart, mark an "X" when prices
rise by the "box size" (user specified, allowing you to set the
sensitivity). Mark an "O" when prices fall by the box size. No Xs
or Os are drawn if prices fail to move by at least the box size.
Columns contain only Xs or Os, never both.
To start a new column
(for example to switch from an X column to an O column), prices
must reverse by your "reversal amount" (another user specified value)
multiplied by the box size. E.g a box size of 5 points and a reversal
amount of 3 boxes means prices must reverse 15 points before you
can start a new column. This changing of columns means the trend