THE HAndbook oF TEcHnIcAl AnAlysIsFor example, assuming the box size of $2, only one new box will be plotted if
price closes between $12 and $13.99 at the end of a specified period or interval,
regardless of whether price exceeded the $14 level or higher at some point prior
to the close.
For the high/low approach, the rules for determining if the minimum box size
is achieved are a little more complicated, and they are as follows:
- In a sequence of rising Xs, plot a new X if the high achieves the minimum box
size for a continuation move up and ignore all subsequent lows within that period
or interval, even if a downside reversal has been identified. If no new Xs can be
plotted, then plot any downside reversal that occurs within that period or interval.
Otherwise, no new continuation or reversal boxes are plotted for that period. - In a sequence of declining Os, plot a new O if the low achieves the minimum
box size for a continuation move down and ignore all subsequent highs within
that period or interval, even if an upside reversal has been identified. If no new
Os can be plotted, then plot any upside reversal that occurs within that period
or interval. Otherwise, no new continuation or reversal boxes are plotted for
that period.
See Figure 15.8.
Notice the discrepancy in the displayed price action between box sizes that
employ the closing price and high/low price. We also observe some differences in
the volume by price data.
non‐accounting of significant price action
It should be noted that detractors of the high/low approach argue that this method
of plotting tends to misrepresent significant moves in the market. Once the high
Figure 15.8 Comparing Closing Price versus High/Low Price on a Point‐and‐Figure
Chart of Apple Inc.
Courtesy of Stockcharts.com