Point & Figure Chart
Barron's Finance & Investment Dictionary:
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Point & Figure Chart
graphic technique used in Technical Analysis to follow the up or down momentum in the price moves of a security or sector. Point and figure charting disregards the element of time and is solely used to record changes in price. Every time a price move is upward, an X is put on the graph above the previous point. Every time the price moves down, an O is placed one square down. When direction changes, the next column is used. The resulting lines of Xs and Os will indicate whether the security or sector being charted has maintained an up or a down momentum over a particular time period.
| Point, Plus Tick | |
| Poison Pill, Poison Put |
Investopedia Financial Dictionary:
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Point & Figure Chart
A chart that plots 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. As you can see from the chart below, 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. Traders will place orders when the price moves beyond identified support/resistance levels.
Investopedia Says:
Additional points are added to the chart once the price changes by more than a predefined amount (known as the box size). For example, if the box size is set to equal one and the price of the asset is $15, then another X will be added to the stack of Xs once the price surpasses $16. Each column consists of only one letter (either X or O) - never both. New columns are placed to the right of the previous column and are only added once the price changes direction by more than a predefined reversal amount.
Related Links:
Take a look at how to construct and read these simple charts designed for longer-term positions. Point and Figure Charting
Point-and-figure charts eliminate the noise surrounding a stock to help you determine where it's headed. Tic-Tac-Toeing Your Way To Better Returns
The easy and under-used NYSE Bullish Percent Index provides insight into market conditions. Which Direction Is the Market Heading?
Learn the patterns that will help you pinpoint and profit from breakouts. Testing Point-And-Figure Patterns
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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