Chapter

15

point‐and‐Figure Charting

L e a r n i n g O b j eCt i v e s

After studying this chapter, you should be able to:

■ Understand the difference between Point‐and‐Figure charting and conventional bar

charts

■ Use volatility to filter out market noise to reveal the underlying trend

■ Identify the advantages and disadvantages of using closing prices and high/low prices

to determine box size

■ Use Point‐and‐Figure charts to track market breadth and relative strength in the markets

■ Identify precise buy and sell points on the various Point‐and‐Figure chart patterns

p

oint‐and‐Figure charting is essentially an exercise in reading pure price action.

Volume and time are excluded and only price is observed, strictly for potential

support and resistance levels. In this chapter, we will cover Point‐and‐Figure chart

construction, minimum price projections, trade‐related issues, and various Point‐

and‐Figure forecasting techniques.

15.1 Basic Elements of Point‐and‐Figure Charts

As we saw in Chapter 4, there are four basic ways to plot price action on the

charts, namely as:

1. Constant range bars


2. Constant time bars


3. Constant tick bars


4. Constant volume bars