What is Point and Figure Charts?
Unlike any other traditional charts, point and figure charts do not plot price against time. It applies alternate columns of stacked Xs and Os to track the change of price direction, in which X columns represent price rise, O columns illustrate price fall.
The Benefits of Using Point and Figure Charts
The primary advantage of using point and figure charts is to filter out trivial price fluctuation while removing time effects, which makes identify major support and resistance levels much easier.
Applying Point and Figure Charts to Forex
While point and figure charts are quite common among old timers in stock trading, it’s relatively new to the community of Forex day trading.
The old fashioned way to create point and figure charts is using graph paper and pencil. I use Excel to construct point and figure charts for the three currency pairs I am currently watching (USD/JPY, GBP/USD, and EUR/USD). For the day trading purpose, I keep two types of point and figure charts – daily point and figure charts (dPnF), and hourly point and figure charts (hPnF). For the daily point and figure charts, I use 100-pip box size, and 3-box reversal. For the hourly point and figure charts, I use 33-pip box size for euro and pound, 25-pip box size for yen.
The hourly point and figure charts are updated in real time. The daily point and figure charts are updated by the end of the US session. If you decide to use Excel to generate point and figure charts, I recommend get at least one year data to draw the daily point and figure charts, and at least two months data for hourly point and figure charts.
There are lots of patterns in point and figure charts. I found the most useful point and figure patterns are double top (DT), double bottom (DB), triple top (TT), and triple bottom (TB). It really highlights the tug of war between bear and bull, supply and demand, resistance and support. For more information, visit PnF Master.
Click here to visit Forex Trading Made Easy with Point & Figure
5 comments:
hi trader rich,
nice blog and very informative, thank you .
happy trading
recs,
Thanks Ben 10, I just get started writing market comments. I will keep posting.
Hey trader rich,
nice to see another blog on forex point & figure online :)
i would be glad if you could contact me to share experiences. hope i can also write some blog entries from time to time.
keep up the good work!
Does anyone know of a software solution for calculating P & F targets by 'count'?
Yes... you can use Bulls Eye Broker of Updata for target calculation
Post a Comment