July 2010
Intermediate to advanced
275 pages
5h 28m
English
book
Sentiment Indicators - Renko, Price Break, Kagi, Point and Figure: What They Are and How to Use Them to Trade
by Abe Cofnas
Content preview from Sentiment Indicators - Renko, Price Break, Kagi, Point and Figure: What They Are and How to Use Them to TradeBecome an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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Chapter 10. Point and Figure Charts
The aim of this chapter is to present a review of the basic concepts and applications of point and figure charting to trading markets.
Point and figure charting represents the final chart type in our discussion of alternative charting. Like price break charts and Kagi charts, this chart type's origins precede the age of the computer. It is the only alternative chart type whose origin is in the West. In recent years, Thomas Dorsey has been a notable leader in applying point and figure charts to analysis of price movements. Jeremy Du Plessis, in the preface to The Definitive Guide to Point and Figure (Harriman House), states:
[A]nyone wishing to practice technical analysis of the markets should be fully conversant with [point and figure charting]. [It] may be the oldest method of charting the market in the Western world, but that does not mean [it] should be ignored in our modern world. On the contrary, once you understand more about [it], you will wonder how you survived without [it].
How Point and Figure Charts Work
Point and figure charts work in the following way: When a price exceeds and closes at a predetermined distance up, it gets an X posted. If it reverses by three times the value of a prescribed number, it gets an O column. If a price exceeds a predetermined distance down, it gets an additional O posted, and if it reverses by three times the value of a prescribed number, it gets an X column. In point and figure charting this is known as a ...
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