Point and Figure Chart

A price chart that captures pure price movement with no regard for time or volume. Rising prices are denoted by a column of Xs and falling prices by a column of Os. Subsequent columns are placed to the right of earlier columns. The value assigned to each box is a matter of choice. The lower the value the more sensitive the chart will be to price movements. The reversal criteria, or the number of boxes that have to be retraced to cause a reversal and the recording of prices in the next column, are also a matter of choice. A three box reversal, in which three boxes are retraced before a reversal is signalled, is often used.

See also: Chart Patterns, Technical Analysis