Point & Figure Chart


DEFINITION of '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 X's or O's. A column of X's is used to illustrate a rising price, while O's 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.

Point & Figure Chart

BREAKING DOWN 'Point & Figure Chart'

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.

  1. Box Size

    The minimum price change that must occur before the next mark ...
  2. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  5. Line Chart

    A style of chart that is created by connecting a series of data ...
  6. Reversal Amount

    The amount of price movement required to shift a chart to the ...
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