Introduction to Point and Figure Charting

Welcome to this introductory lesson on point and figure charting. In this session, we will explore a charting method that, while less commonly used today, has deep historical roots and offers a uniquely clear perspective on price movements. As a Chartered Market Technician, I’ve spent considerable time working with various chart types, and I’ve found that point and figure charts stand out for their ability to highlight true shifts in supply and demand without the distractions often present in time-based charts.

What Makes Point and Figure Charts Unique

Point and figure charting developed in an era when traders had to simplify their methods due to limited technology. Instead of including every single price fluctuation, this technique filters out much of the “noise” by removing the element of time and focusing purely on significant price changes. As a result, the charts become a straightforward tool for identifying trends, support and resistance levels, and potential breakout points.

 
Chart Construction

We’ll begin by examining how to properly set up and construct point and figure charts. You will learn what symbols (X’s and O’s) represent, how box sizes and reversal amounts affect chart interpretation, and how these choices ultimately influence your trading insights.

Pattern Recognition

We will review the most common patterns found in point and figure charts. These patterns are not overly complicated, yet they clearly define when price momentum is shifting, allowing you to react decisively to emerging market conditions.

Strategic Application

You will gain an understanding of how to apply point and figure charts to your trading strategy. We will discuss how you can incorporate this method into your current toolkit, using it to confirm signals from other chart types, identify market turning points, and set well-defined price targets.
 

Why This Matters

While newer, technology-driven methods and indicators often dominate today’s trading landscape, it is important not to overlook time-tested approaches that can still provide valuable insights. By learning how to use point and figure charting, you will broaden your analytical capabilities, potentially giving yourself an additional edge in spotting opportunities that other traders may miss.
As you progress through this lesson, keep an open mind about how point and figure charts can integrate with the methods you already use. By the end of this session, you will have a solid understanding of the principles, patterns, and practical applications of this classic, yet underutilized, charting technique.

Investopedia
https://www.investopedia.com/terms/p/pointandfigurechart.asp

Contributor

Michael Nauss, CMT

Substack:  https://michaelnausscmt.substack.com/

Site:  www.statsedgetrading.com