Point and Figure Charts

Point and Figure (P&F) charts are a unique charting method that strips away time and focuses purely on price action. They are especially useful for identifying support and resistance levels, trend changes, and for filtering out minor price noise in trending markets.

What are Point and Figure Charts?

Point and Figure charts are a graphical technique used to plot price movements without regard to time. Instead of plotting every price tick over a fixed time period, P&F charts:

Use a fixed box size to represent price movements
Plot X marks when prices rise (bullish columns)
Plot O marks when prices fall (bearish columns)
Only record a new column when the price reverses by a specified reversal amount
Ignore minor price fluctuations and time passage

Why Use Point and Figure Charts?

P&F charts offer several distinct advantages:

Cleaner Trends: Automatically filters out minor price noise and insignificant moves
Support and Resistance: Naturally highlights psychological price levels and round numbers where traders place orders
Pattern Recognition: Makes classic chart patterns (double tops, double bottoms, breakouts) more obvious
Trend Clarity: Vertical columns make it easy to see the strength and direction of trends
Entry and Exit Signals: Column reversals provide clear breakout signals

Understanding Point and Figure Basics

Boxes and Price Tiers

Stockalyze uses a tiered box sizing approach that automatically adjusts the box size based on the price level. This approach ensures that:

Box sizes remain proportional at all price levels
Psychological price levels (100, 200, 500, 1000, etc.) are preserved
Support and resistance areas align naturally with market structure

The following table shows the price tiers and their corresponding box size multipliers:

Price Range	Box Size Multiplier	Example (with 0.25 base)
0 – 5	1×	Box size = 0.25
5 – 20	2×	Box size = 0.50
20 – 100	4×	Box size = 1.00
100 – 200	8×	Box size = 2.00
200 – 500	20×	Box size = 5.00
500 – 2,500	40×	Box size = 10.00
2,500 – 12,500	200×	Box size = 50.00
12,500 – 62,500	1,000×	Box size = 250.00
62,500 – 312,500	5,000×	Box size = 1,250.00
312,500+	10,000×	Box size = 2,500.00

X and O Marks Explained

On a P&F chart, X marks (displayed in green) represent an up column where prices are rising. O marks (displayed in red) represent a down column where prices are falling.

AAPL Point and Figure Chart with X and O marks

Basic Point and Figure Chart showing rising column (X marks) and falling column (O marks)

Creating a Point and Figure Chart

Step 1: Open the P&F Chart View

From the Stockalyze menu, select New EoD P&F Chart or click on the New Point and Figure Chart tool on the main Stockalyze window, also known as gateway window.

Creating Point and Figure Chart from gateway window

Creating a Point and Figure Chart from the gateway window

Step 2: Configure Parameters (Optional)

From the toolbar you can select if closing price should be used, or if you want to use the high/low price. You can also change other settings such as the minimum box size and reversal amount. The minimum box size is the base unit used for the lowest price tier (0–5). The reversal amount determines how many boxes of price movement are required to switch from an up column (X) to a down column (O), or vice versa. To change these settings, click on the gear icon in the toolbar.

Point and Figure Configuration Dialog

Configuration Parameters

Minimum Absolute Box Size

This parameter defines the base unit box size used for the lowest price tier (prices below 5). The box size for higher price tiers is automatically calculated using the multiplier system described above.

Default: 0.25
Typical values: 0.10, 0.25, 0.50, 1.00
Effect: Larger values create fewer boxes and a cleaner chart; smaller values create more detail

Example: If you set the minimum absolute box size to 0.25:

For a 12 stock: box size = 0.25 × 2 = 0.50
For a 150 stock: box size = 0.25 × 4 = 1.00
For a 300 stock: box size = 0.25 × 20 = 5.00

Minimum Box Reversal

This parameter defines how many boxes of reversal are required before the chart switches from an up column (X) to a down column (O), or vice versa. It prevents the chart from constantly switching directions due to minor price fluctuations.

Default: 3 boxes
Typical values: 2, 3, 4, 5
Effect: Higher values create fewer columns and a cleaner chart; lower values create more detail and more reversals

Example: With a box size of 1.00 and a 3-box reversal:

Prices must fall 3 × 1.00 = 3.00 before switching from up (X) to down (O)
Prices must rise 3.00 before switching back from down (O) to up (X)

Set as Default

All changes in the configuration are saved as the default for all new Point and Figure charts you create in the future.

Examples: Point and Figure Charts at Different Price Levels

Example 1: Low-Priced Stock (price below 20)

For a stock trading below 20 with 3-box reversal:

Below is point and figure chart for TomTom. Its a low-priced stock showing frequent reversals. The chart clearly shows that the stock has a long term support and resistance around 5.5.

Point and Figure chart for a low-priced stock showing frequent reversals and more detail

Example 2: High-Priced Stock

Below is the point and figure chart for Microsoft (MSFT), a high-priced stock. The chart shows that the stock has a resistance level around 435. The stock has been in a long term down trend and in the short term it is an uptrend facing a resistance at 435.

Notice that the box size is larger than the low-priced stock.

Point and Figure chart for MSFT, a high-priced stock

Reading Point and Figure Charts

Identifying Trends

On a P&F chart, a series of rising X columns indicates an uptrend, while a series of falling O columns indicates a downtrend.

Support and Resistance Levels

P&F charts naturally highlight support and resistance levels. The tiered box sizing ensures that psychological price levels (like 100, 200, 500) and price areas where the stock has repeatedly bounced are clearly visible.

Breakouts and Reversals

A column reversal—when the chart switches from X to O or vice versa—indicates a potential trend change. A breakout occurs when the price moves above or below previous X and O column extremes, signaling potential new trend.

Tips and Best Practices

Choosing the Right Box Size

For very volatile stocks: Consider using a larger box size to filter out noise and see the main trend more clearly
For quiet stocks: A smaller box size may provide more trading detail
For long-term analysis: Larger box sizes work better to identify major support/resistance levels
For short-term trading: Smaller box sizes may reveal more trading opportunities

Choosing the Right Reversal Amount

3-box reversal (default): Good balance between filtering noise and capturing real reversals. Recommended for most traders
2-box reversal: More sensitive; creates more columns and trading signals. Useful for active traders
4-box reversal or more: Less sensitive; requires more pronounced reversals. Better for identifying major trend changes

Combining P&F Charts with Other Tools

Use P&F charts to identify key support and resistance levels, then confirm with technical indicators like RSI or MACD
Look for divergences between P&F signals and price momentum indicators
Use multiple time frames or different box sizes to confirm breakouts
Combine P&F analysis with candlestick or bar chart analysis for confirmation

Practical Trading Approach

Identify the trend: Look for consistent X or O columns
Find support/resistance: Note where columns repeatedly reverse
Watch for breakouts: When the chart moves above/below previous extremes
Confirm with other indicators: Use volume, momentum indicators, or moving averages to confirm signals

Advanced: Using P&F Charts with Indicators

You can also create P&F charts from technical indicator output. This is useful for analyzing the behavior of indicators at different scales. For example, you might create a P&F chart from a MACD histogram to identify when momentum is reversing.

Common Questions

Why do different price levels have different box sizes?

The tiered approach ensures that a 0.25 move in a 5 stock has the same visual significance as a proportional move in a 500 stock. This makes it easy to compare chart patterns and support/resistance behavior across different price levels.

How is this different from traditional Point and Figure?

Traditional P&F charting often uses fixed box sizes (e.g., 1 for all stocks), which creates problems at very low and very high price levels. Stockalyze's tiered approach automatically adapts while preserving psychological price levels, providing cleaner and more meaningful charts.

Can I adjust the tiers?

Currently, the price tiers are fixed in Stockalyze. However, you can experiment with different base box sizes (0.10, 0.25, 0.50, 1.00) and reversal amounts to achieve different levels of detail and sensitivity.

What is the ideal reversal setting?

There is no universal "ideal" setting—it depends on your trading style and the specific security you're analyzing. A 3-box reversal is a good starting point recommended by most P&F practitioners. Experiment with 2- and 4-box reversals to see what works best for you.