Richard Jemison’s Point & Figure Newsletter – History
The law of supply and demand governs the movement of Commodity Futures prices. Imbalances in supply and demand causes prices to move up and down.
The Point & Figure method of analyzing movements is designed simply as a logical, organized way of recording the battle between supply and demand. The Point & Figure charts show whether supply or demand is “winning the battle”. Chart patterns and trend lines will guide the buy and sell decisions.
History and Description of Point & Figure Charts
The technique is over 100 years old. A detailed history can be found in Jeremy du Plessis’ “The Definitive Guide to Point and Figure” where many references and examples are cited.
Du Plessis describes their development from a price recording system to a charting method. Traders kept track of prices by writing them down in columns and noticed patterns in their records and started referring to them as fluctuation charts and later, figure charts. Eventually using Xs instead of numbers these charts became known as point charts. Traders used both point charts and figure charts together and referred to them as their point and figure charts, thus Du Plessis suggests the name origin of “point and figure”. Modern point and figure charts are drawn with Xs and Os where columns of Xs are rising prices and columns of Os are falling prices.
Advantages of Point and Figure
Point and Figure charts are based on price action, not time. If there are no significant price moves, nothing changes. Proponents argue that this difference makes finding patterns and trends in P&F charts easier than other charts because it filters out unnecessary data.1
Sample point and figure chart with box size set to $5 and reversal threshold set to 3 box sizes.
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