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2017issue C1234-38

Point-and-figure construction, reversals, and column-based overlays

Point-and-figure construction starts with box size and reversal so the chart records only decisive price movement. Column moving averages and on-balance volume can then sit on that same grid, or they can put calendar time back onto a chart that otherwise ignores it.

  • A point-and-figure chart advances only when price fills the chosen box increment, so a quiet market leaves the chart unchanged because time is not a plotting axis.
  • One-box reversal charts are more sensitive and can show rises and falls inside a single three-box column; three-box reversal is used for a longer-term reading of trend and targets.
  • Moving averages and related oscillators can be counted across columns rather than calendar days, and an on-balance volume line can be built from volume in each X or O column.
  • A double-top buy is constructed when an X column exceeds a prior X-column high, and those pattern signals are read only in the direction of the prevailing trend.
Entries in this reading3 entries
On-balance volume25 readingsCurrent trackPoint and figure chart37 readingsMoving average449 readings

What the chart records

A point-and-figure chart advances only when price fills the chosen box increment. If the market is quiet, the chart does not move, because time is not a plotting axis.

Unlike a bar or candle chart, a point-and-figure column does not display the high-low range of a session. It records a close or a high or a low at the end of the chosen interval, never both extremes as a range.

Modern construction uses a column of Xs while price is rising and Os while price is falling, so the active column itself states whether buyers or sellers currently control the move.

Box size and reversal

Box size is the price increment that must be filled before a new mark is added. It can be a fixed amount or a percentage on a log scale. Box size may also be set with a volatility measure such as standard deviation or average true range so the increment roughly matches the instrument being plotted.

One-box reversal charts change direction after a single-box reversal and are more sensitive. Three-box reversal charts were historically derived from them to give a longer-term view, and a one-box chart can show rises and falls that sit inside a single three-box column.

Three-box reversal analysis is described as objective for targets and trends, while one-box reversal interpretation is described as subjective. The historical workflow used three-box charts as the main analysis and kept a one-box chart as a more sensitive companion.

Column moving averages and on-balance volume

Construction can attach moving averages to columns rather than calendar days, then compute column-based MACD, RSI, directional movement, or Bollinger Bands from those column values.

Volume can be shown per column or horizontally per price level. An on-balance volume line can be drawn from the volume in each X and O column to read accumulation or distribution on the same grid.

Trendlines and the double-top buy

On a log-scale daily point-and-figure chart, 45-degree trendlines and a target were presented as an objective medium- to long-term construction.

A double-top buy is constructed when an X column exceeds a prior X-column high. Exceeding more than one prior column yields a stronger triple or quadruple top. Such pattern signals are read only in the direction of the prevailing trend.

S&P 500 daily 1% × 3-box point-and-figure

Three-box 1% log point-and-figure of daily S&P 500 closes through 17 October 2017. A new column prints only after a 3% reversal, so the 2009 low near 690 and the 45-degree support rising from it are column events, not calendar time. The last column is printed at 2555.93; 2780.56 is the vertical-count objective on the figure, which the interview dates to June 2016. Swing endpoints were read from the published log price grid.
Three-box 1% log point-and-figure of daily S&P 500 closes through 17 October 2017. A new column prints only after a 3% reversal, so the 2009 low near 690 and the 45-degree support rising from it are column events, not calendar time. The last column is printed at 2555.93; 2780.56 is the vertical-count objective on the figure, which the interview dates to June 2016. Swing endpoints were read from the published log price grid.S&P 500 · Daily 1% × 3-box point-and-figure · 2000-01-01T00:00:00.000Z to 2017-10-17T00:00:00.000Z

Updata daily close chart, 1% log box, three-box reversal, dated 17 Oct 2017. Unlabeled turns are raster reads from the log grid, rounded to the nearest ten index points, and skip some minor columns. The 2780.56 series is the printed count target, not a traded high.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
29 of 30 in the Point and figure chart track
201938-42 pp.Next on Point and figure chartA 2019 charting case as a three-check trend classroomA 2019 workspace listed point-and-figure views with candlestick, bar, line, and multi-horizon-gallery charts so one ticker could be inspected from intraday through yearly scale.
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
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