pointandfigure

Point and figure is a method of charting used in technical analysis that focuses solely on price changes and disregards time intervals. The instrument displays price on a vertical axis while plotting Xs to represent upward price movement and Os to represent downward movement. Each column is comprised of a set number of boxes, typically five, which correspond to a chosen price increment or box size. A new column is drawn only when the price moves by a specified number of boxes, a process known as a “break” or “reversal”. For example, if the box size is $1 and the price needs to move $5 before a reversal, the chart will not change until the price has moved five boxes either direction.

The simplicity of point and figure charts eliminates noise from smaller price fluctuations, making long‑term trends and support or resistance levels easier to identify. Common patterns include tops, bottoms, double tops/bottoms, triangles, and channels, which traders interpret as potential turning points or continuation signals. Because the method removes time from the analysis, it is considered a “time‑neutral” approach, valuable for investors who want to focus on price momentum rather than session durations.

Critics argue that the lack of time data can obscure the pace of price changes, leading to late entry or exit signals. Additionally, the choice of box size and reversal amount can significantly alter the chart’s appearance, requiring careful selection or optimization. Nevertheless, point and figure charts remain popular in both discretionary and automated trading systems for their clarity in depicting significant price movements and for aiding the identification of strong support and resistance levels.