Point and
Figure charting differs from other
charting techniques by the fact that
it only requires price for analysis,
not time. It is also plotted differently
by using columns and rows using price
movement only.
Point and
Figure was developed towards the end
of the nineteenth century. This new
form of charting was referred to as
the "book method". The book
method was applied by entering the
actually prices into the rows and
columns however this proved to be
not very popular since it was time
consuming to enter the entire price.
It was upgraded by the early twentieth
century into point and figure. Unlike
the book method, point and figure
uses the symbol X or O to describe
the price movement rather than writing
the entire price into the field.
There is
also a significance given to the number
three in point and figure charting.
When movements hit the support or
resistance line, extra attention should
be spent on the third collision. There
is also quite a few patterns where
the third hit is when the signal is
generated.
Due to
the accuracy of the signals provided
by point and figure charting, interest
in this form of analysis is continuously
growing.
Point and
Figure patterns can be categorized
by "bearish",
"bullish",
"reversal",
and "wait
and see" (trend continuation).
