Point and Figure Patterns

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Point and Figure Patterns

Point and Figure charting differs from other charting techniques by the fact that it only requires price for analysis, not time. It is also plotted differently by using columns and rows using price movement only.

Point and Figure was developed towards the end of the nineteenth century. This new form of charting was referred to as the "book method". The book method was applied by entering the actually prices into the rows and columns however this proved to be not very popular since it was time consuming to enter the entire price. It was upgraded by the early twentieth century into point and figure. Unlike the book method, point and figure uses the symbol X or O to describe the price movement rather than writing the entire price into the field.

There is also a significance given to the number three in point and figure charting. When movements hit the support or resistance line, extra attention should be spent on the third collision. There is also quite a few patterns where the third hit is when the signal is generated.

Due to the accuracy of the signals provided by point and figure charting, interest in this form of analysis is continuously growing.

Point and Figure patterns can be categorized by "bearish", "bullish", "reversal", and "wait and see" (trend continuation).

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