Point and Figure Charting

Point and Figure (P&F) charts are the oldest form of technical analysis, filtering out all time-based noise to show pure supply and demand dynamics with built-in price targets.

How P&F Charts Work


The Basics

• X columns represent rising prices (demand)
• O columns represent falling prices (supply)
• Each X or O represents a fixed price movement (box size)
• A reversal requires a minimum number of boxes in opposite direction
• Time is completely irrelevant

Box Size

• Determines sensitivity of the chart
• Smaller boxes = more detail, more columns
• Larger boxes = smoother, bigger picture
• For EUR/USD: 10-20 pips per box for swing trading
• For stocks: Often 1-point or percentage-based

Reversal Amount

• Most common: 3-box reversal
• Price must move 3 boxes in opposite direction to start new column
• 1-box reversal: Very detailed (point and figure scalping)
• 5-box reversal: Big picture, major trends only

P&F Chart Patterns

Double Top Breakout (Bullish)

• X column rises to same level as previous X column
• Then exceeds it by one box
• Breakout above the resistance level
• Buy signal with stop at recent O column low

Double Bottom Breakdown (Bearish)

• O column falls to same level as previous O column
• Then exceeds it by one box
• Breakdown below support
• Sell signal with stop at recent X column high

Triple Top Breakout

• Three X columns reaching same resistance level
• Fourth attempt breaks through
• Stronger signal than double top (tested 3 times)
• High probability bullish breakout

Triple Bottom Breakdown

• Three O columns reaching same support level
• Fourth attempt breaks through
• Strong bearish signal

Catapult Pattern

• Triple top forms, breaks out
• Pulls back but holds above previous breakout
• Then continues higher
• Very high probability continuation pattern

Price Targets

Horizontal Count

1. Measure the width of a consolidation pattern
2. Count the number of columns in the pattern
3. Multiply by box size and reversal amount
4. Add to (or subtract from) the breakout level
5. This gives your measured move target

Vertical Count

1. Count the number of Xs in the breakout column
2. Multiply by box size and reversal amount
3. Add to the bottom of the column
4. Quick target calculation method

Support and Resistance on P&F

Trendlines

• 45-degree bullish support lines drawn from lows
• 45-degree bearish resistance lines drawn from highs
• Price respecting these angles = trend intact
• Break of trendline = potential trend change

Horizontal Levels

• Support/resistance is clearer than any other chart type
• Multiple Os stopping at same level = strong support
• Multiple Xs stopping at same level = strong resistance
• No wicks or shadows to confuse the picture

Advantages of P&F

Why Traders Use It

1. Eliminates time and intra-period noise completely
2. Support and resistance levels are crystal clear
3. Built-in price target calculation method
4. Patterns are simple and unambiguous
5. Reduces emotional decision-making

Best Used For

• Identifying breakout levels
• Setting price targets
• Confirming trends identified on regular charts
• Long-term position trading

Combining with Other Analysis

P&F + Regular Charts

1. Use P&F to identify key breakout/breakdown levels
2. Switch to candlestick chart for entry timing
3. Use P&F price targets for take-profit levels
4. Best of both worlds approach

P&F + Relative Strength

• Compare P&F charts of related instruments
• Buy the one with P&F buy signal
• Avoid the one with P&F sell signal
• Used extensively by institutional stock traders

Key Takeaways

1. P&F removes time and shows pure supply/demand
2. X columns = demand, O columns = supply
3. Double and triple tops/bottoms are the key patterns
4. Built-in price targets using horizontal and vertical counts
5. Best combined with traditional charts for entry timing