Point & Figure Chart is ancient charting technique using X's and O's to represent price rises and falls, completely ignoring time and volume. X columns indicate rises, O columns indicate falls. P&F filters minor fluctuations, clearly showing support/resistance and price patterns.
Box Size = Fixed price movement (like 1 point, 10 points, etc.) Reversal Boxes = Typically 3 boxes X Column (Rising): Price rises more than box size, draw X O Column (Falling): Price falls more than box size, draw O Column Reversal: When price reverses more than (Reversal Boxes × Box Size), start new column
Traditional P&F (3-box reversal): Most commonly used
1-box Reversal P&F: More sensitive, but more signals
5-box Reversal P&F: More conservative, fewer signals
ATR P&F: Box size dynamically adjusted based on ATR
Double Top Breakout: X column breaks above previous high, buy signal
Double Bottom Breakdown: O column breaks below previous low, sell signal
Triple Top Breakout: Stronger buy signal
Triple Bottom Breakdown: Stronger sell signal
45-degree Trendlines: Uptrend lines and downtrend lines
Support/Resistance: Horizontal X's and O's form obvious support/resistance
Pattern Recognition: Head and shoulders, inverse head and shoulders clearer
Point & Figure is one of oldest charting techniques, particularly suitable for identifying support/resistance and price patterns. P&F completely filters time and minor fluctuations, making price structure very clear. Double top breakouts and double bottom breakdowns are classic P&F signals. 45-degree trendlines on P&F are important support/resistance. Many traders use P&F for long-term analysis, identifying major support/resistance and price targets. P&F box size and reversal box settings significantly affect results.
Filters time and noise, support/resistance very clear, pattern recognition easy, provides price targets, time-tested
Completely ignores time and volume, steep learning curve, parameter settings subjective, not suitable for short-term trading, updates slowly in low volatility markets
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