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Point and figure charts

The point and figure (P&F) is another type of price charting; the difference is that P&F ignores time. Time is irrelevant; only price matters. Xs and Os indicate price signals. The point and figure chartist uses Xs to illustrate rising prices and Os for falling prices. As long as the price is rising, Xs are added. Os come into play when they are dropping. The decision to start a new column of Xs or Os is based on the market making a price change of a certain amount designated by the technician. This would be a box. The technician also must designate (in addition to the size of each box) what determines a reversal.

For example, a popular reversal size is three boxes. So, if you use a scale of 10 points for cattle, a reversal size would be 30 points. The values for the box and reversal are arbitrary, depending on how sensitive the trader wants his point and figure chart to be.



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