V. 20:1 (30-33): Point & Figure Charting by David Penn

Point & Figure Charting by David Penn

With all its Xs and Os, three-point reversals, and subtle-but-effective chart patterns, point and figure charting is still all about supply and demand.

What if you were turned on to a method of charting the market that was as applicable to Cisco Systems as it was to the September light crude futures contract? What if this method also meant all those indicators and oscillators that reminded you more of an EKG machine than a way of making money could be tossed overboard? What if this method went one step further and allowed you to forget about all those volume bars at the bottom of your charts (since volume bars can be notoriously inaccurate)? While many market players spend their time devising ever more complex ways of interpreting price and volume data, others continue to insist the simpler methods — from simple bar and candlestick charts to moving average crossovers — are easier to learn, revise, refine, and profit from. Point and figure charting can certainly be included among these simpler methods. Even the chief obstacle to using point and figure charts, the at-times tricky process of first learning how to accurately post P&F charts, has been virtually eliminated by charting software programs (some of them online), most of which feature point and figure charting as an option.