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1991issue C031-7

Constructing a point-and-figure downtrend-break

Box-size and reversal-size decide when a slow leading-index and an on-balance-volume line are allowed to print the same upside break. The archive showed both charts clearing a mark labeled A. Editorial reading treats that pairing as one falsifiable trend test.

  • Point-and-figure posts a box only after price covers the full box-size, and it opens a new column only after the reversal-size is filled.
  • On-balance-volume adds session volume after an up close and subtracts it after a down close, and it is read for a direction change ahead of the related price index.
  • The archive presented a utility-index clear of resistance and an exchange-wide on-balance-volume clear of a descending mark as matching trend constructions.
  • Editorial view: the two charts become one test when the same box-size and reversal-size let both print a downtrend-break.
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Current trackPoint and figure chart37 readings

The downtrend as a construction

A point-and-figure chart posts only moves large enough to fill a chosen box and does not require calendar time as a plotting axis. Reversals smaller than the chosen minimum are omitted. A column-annotation may place a month letter in a column so a reader can locate time without making time part of the trend calculation.

A downtrend-break is a constructed event in which a rising column of Xs clears a descending line drawn across prior peaks. Until the chosen box-size and reversal-size allow that print, the descending line remains the posted structure.

How a one-by-three chart posts

On a one-by-three scale, each box is one price unit and a new opposite column starts only after a three-box reversal. Xs record advances and Os record declines. A box is posted only after price covers its full increment, and a bounce that stays inside the reversal distance extends the current column instead of opening a new one.

The same construction is used to mark trend, consolidation, and reversal structure. A sideways count of a trading range can be added to the consolidation low to project a bullish objective.

On-balance-volume as an earlier line

An on-balance-volume line is a running sum of each session's volume, adding volume after an up close and subtracting volume after a down close. The intended reading looks for the volume line to change direction or break out before a matching change appears on the related price index.

A slow leading-index and a matching tape

The utility index was described as moving slowly and in small increments while typically shifting first, so a close through a long-term downtrend was treated as a leading construction. That slower series is the leading-index check on the same trend hypothesis applied to the broader market.

The utility-index point-and-figure chart was presented as a trend signal when it cleared a resistance mark labeled A. After the composite index rose, the volume line was shown printing an upside breakout in the rightmost column of Xs. The exchange-wide on-balance-volume point-and-figure chart was presented as a constructive tape when it cleared a downtrend mark labeled A.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
7 of 30 in the Point and figure chart track
19911-3 pp.Next on Point and figure chartConstructing point-and-figure box and reversal chartsBox size is the smallest price increment that may be posted as one filled box, and reversal size is the number of boxes a contrary move must cover before a new column may be started.
All readings on this track · 30 readings
  1. 1988Constructing trend definitions with filters and lines
  2. 1989Reversal count as the clock on point-and-figure charts
  3. 1989Point-and-figure setup and session-average entry windows
  4. 1989Two-scale point-and-figure trendlines and stop placement
  5. 1989Adjusted net asset value, tighter reversals, and written stops on a fund point-and-figure chart
  6. 1990Stack option odds after point-and-figure signals
  7. 1991Constructing a point-and-figure downtrend-break
  8. 1991Constructing point-and-figure box and reversal charts
  9. 1991Constructing a close-tested one-two ladder on a point-and-figure chart
  10. 1992Point-and-figure, breadth, and volume as falsifiable hypotheses
  11. 1992Three-gate stock selection with ranks and point and figure
  12. 1993Constructing combined stochastics and point-and-figure relative strength
  13. 1997Point-and-figure box scale and reversal construction
  14. 2000Cotton weekly point-and-figure: late-stage decline, named weekly close
  15. 2000Constructing point-and-figure charts for support, resistance, and breakouts
  16. 2001Swiss franc: seasonal permission and a weekly point-and-figure breakout
  17. 2001Constructing point-and-figure boxes and reversals
  18. 2002Point-and-figure construction: box, live column, and three-box reversal
  19. 2003E-mini point-and-figure box-size and a descending-triangle breakout
  20. 2003A reconstruction critique of point-and-figure daytrading
  21. 2004Point-and-figure column moving-average crossovers
  22. 2005Box-series transforms for trend and channel work
  23. 2006Constructing bearish point-and-figure support breaks
  24. 2008Point-and-figure forex breakouts and triangles
  25. 2012From tactile charts to written trade rules
  26. 2013Combine a Point and figure chart and Moving-average crossover inside one System optimization procedure
  27. 2015Point-and-figure time and volume limits are conventions to test
  28. 2016Measurement-first critique of indicator defaults
  29. 2017Point-and-figure construction, reversals, and column-based overlays
  30. 2019A 2019 charting case as a three-check trend classroom
By fieldTrend and channels181 readingsBy year199198 readings
All 37 readings tagged Point and figure chart
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