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1991issue C081-7

Constructing a close-tested one-two ladder on a point-and-figure chart

A point-and-figure chart is built from box size and reversal size, then read as a three-state tape. From that grid a one-two-positive or one-two-negative ladder is posted three steps ahead of price, and only close confirmation in the final box treats the path as a trend signal.

  • A point-and-figure chart is posted from box size and reversal size, drops reversals below the threshold, and does not use time as a plotting dimension.
  • An X column records a rise and an O column records a fall, and a box is filled only after price covers that box's entire value.
  • The one-two-positive ladder and the one-two-negative ladder are drawn three steps ahead on the grid, and close confirmation decides whether the final box counts as a trend signal.
  • Price is first reduced to a three-state tape of advance, decline, or sideways. A month letter may appear in a column only as a calendar reference.
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Current trackPoint and figure chart37 readings

Set box size and reversal size

A point-and-figure chart is built from a box size and a reversal size. Box size is the smallest price increment that must be fully covered before a new mark is posted. Reversal size is the minimum contrary move, usually a multiple of the box, required before a new column in the opposite direction is started.

On a one-by-three scale each plot needs a full one-unit box, and a new opposite column starts only after a three-box move. The illustrated currency point-and-figure scale uses a 50-point box and a 150-point reversal.

Point-and-figure construction drops reversals smaller than the reversal threshold and does not use time as a plotting dimension. A letter for the month may be written into a column as a calendar reference even though time is excluded from the signal construction.

Fill X columns and O columns

Rising price is posted as a vertical X column. Falling price is posted as a vertical O column. A box is filled only after price covers that box's entire value.

If an advance from an O-column low stays inside the reversal requirement, no new X column is opened. Further weakness continues the same O column.

Read a three-state tape first

Price action is reduced to three states, advance, decline, or sideways, before the box-ladder signal is constructed. That reduction is the three-state tape. No signal box is drawn until the tape has been read in those three states.

Post the one-two-positive ladder

A one-two-positive ladder is a three-step path drawn up and one column right from the box above a prior X-column high, ending at a pre-marked bullish close box.

Post it from the box above a prior high in an X column, then one box up and one column right, then one more box up and one column right. A close in that final box is treated as a bullish trend signal.

Post the one-two-negative ladder

A one-two-negative ladder is a three-step path drawn down and one column right from the box below a prior O-column low, ending at a pre-marked bearish close box.

Post it from the box below a recent low in an O column, then one box down and one column right, then one more box down and one column right. A close at or below that final box is treated as a negative trend signal.

Require close confirmation

Close confirmation is the construction rule that the trigger box counts only if the session finishes in the bullish box or at or below the bearish box. The ladder is posted on the grid before that close. Without the required close, the trigger box is not treated as a trend signal.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
9 of 30 in the Point and figure chart track
19921-10 pp.Next on Point and figure chartPoint-and-figure, breadth, and volume as falsifiable hypothesesA point-and-figure count measures congestion horizontally and implies an upside or downside objective after a breakout, a construction later price can confirm or fail.
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 fieldChart patterns222 readingsBy year199198 readings
All 37 readings tagged Point and figure chart
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