POINT AND FIGURE CHARTING BASICS
The basic point and figure chart shows columns of X's and O's. A column of X's means the stock or index is rising. A column of O's means the stock is falling. Columns of X's and O's alternate back and forth -- they never appear in the same column. For the first action taken in a month, a number is used to designate that particular month (A,B and C represecnt October, November and December). This is how we show the time on the chart. It takes 3 boxes to reverse from one direction (column) to the other. For example, if a stock were trading in a column of X's with a top of 45, it would take a move to 42 to reverse this chart to a column of O's. Going in the other direction, if a stock were trading in a column of O's with a current low at 45, it would need a rally to 48 to reverse the stock back to a column of X's. We use the daily high and low to chart. The last sale is not used. The chart can only move in one direction in a given day. When charting we first check to see if the chart can stay in its current column. If not, we then check for a reversal. The scale used in the charts is below.
Units of Charting
0.0 - 5.0 = 1/4 point per box
5.5 - 20.0 = 1/2 point per box
21.0 - 100.0 = 1 point per box
102.0 and up = 2 points per box
Click here to practice
charting
Point & Figure Chart Patterns
Below are selected chart patterns which we look for when charting. Click
the pattern name to see an example.
DOUBLE TOP - An X (up) column exceeds
the previous X (up) column. The simplest of all buy signals.
TRIPLE TOP - An X column exceeds two
previous X columns, or levels of resistance.
BULLISH CATAPULT - Combination of triple
top buy signal followed by a double top buy signal.
SHAKEOUT - Stock makes two tops, then
breaks a double bottom. This rids stock of weak holders. Can buy on the next
three box reversal to the upside. Shakeout is completed when the triple top
is broken.
BULLISH TRIANGLE - Series of lower
tops and higher bottoms. Chart breaks one way or other. Take action on breakout,
but not till then. 5 columns needed.
BEARISH SIGNAL REVERSAL - Series of
lower tops and bottoms. Quick reversal up and stock breaks out. No accumulatio
n occurs. 7 columns needed.