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The Definitive Guide to Point and Figure: A Comprehensive Guide to the Theory and Practical Use of the Point and Figure Charting Method

Book Description

Point and Figure charts are one of the great secrets of the Technical Analysis world. Highly sophisticated and with a thoroughbred pedigree, they can, however, be overlooked by traders today. Jeremy du Plessis - one of the foremost Point and Figure experts in the world - returns with a fully updated second edition of this definitive guide in an effort to redress this imbalance. This second edition, with an extensive revision to the text and introduction of brand new techniques, demystifies the world of Point and Figure charting. It includes a detailed explanation of the history and development of the technique from its invention to the modern day, and covers the makeup of the chart patterns, why they are created, and how to interpret them. Throughout, readers are encouraged to understand Point and Figure charts from first principles, rather than just remember the names of a series of patterns. It is the first major work for 50 years to discuss in depth the original 1-box reversal method of Point and Figure charting and contrast it with the more popular 3-box reversal method. Further, the explanation of how to use Point and Figure charts to project targets and calculate risk-reward ratios is the most comprehensive ever seen. Also featured in the second edition are: - A step-by-step analysis of the FTSE 100 Index using the 3-box method, as well as the NASDAQ Composite Index, using the 1-box method - A detailed discussion of optimising techniques - An in-depth chapter on Analysing Point and Figure charts, extensively rewritten from the first edition - A new explanation of how Point and Figure parameters are chosen and the implications of choosing them - Two new Point and Figure construction methods never seen before - Point and Figure's contribution to market breadth, with a look at bullish percent and two brand new indicators - Full discussion of Point and Figure gaps and how they provide valuable information about the chart - Lesser known, more advanced techniques such as the use of moving averages, parabolic SAR and Bollinger Bands on Point and Figure charts - Price and volume activity histograms and how they provide information about support and resistance All this is illustrated with numerous colour charts and observations from years of trading experience. According to du Plessis, Point and Figure charts are the 'voice of the market'. This book helps you listen to, and understand, that voice. Part of the Market Technicians Association (MTA) Required Reading list.

Table of Contents

  1. Cover
  2. Publication details
  3. About the Author
  4. Preface to the First Edition
  5. Introduction
  6. Preface to the Second Edition
  7. Introduction to Technical Analysis
  8. Chapter 1: Introduction to Point and Figure Charts
    1. History and development
    2. Where did Point and Figure charts get their name?
    3. The use of Point and Figure charts over the years
    4. The voice of the market
  9. Chapter 2: Characteristics and Construction
    1. Characteristics of Point and Figure charts
    2. Point and Figure construction
    3. The move from intra-day to end-of-day – the great controversy
    4. End-of-interval time frame Point and Figure charts
    5. Log scale Point and Figure charts
    6. Summary
  10. Chapter 3: Understanding Patterns and Signals
    1. 1-Box and 3-Box Reversal charts
    2. Point and Figure signals
    3. The strength of the pattern
    4. Terminology clarification
    5. 1-box and 3-box patterns
    6. Traps
    7. Broadening patterns
    8. Bullish and bearish patterns that reverse
    9. Poles
    10. Other patterns
    11. Congestion analysis
    12. Summary
  11. Chapter 4: Understanding and Using Trend Lines
    1. Trend line breaks
    2. 45° Bullish support and bearish resistance lines
    3. Trend lines and signal rules
    4. Summary
  12. Chapter 5: Projecting Price Targets
    1. Counts on 1-box reversal charts
    2. Counts on 3-box reversal charts
    3. Things you should know about Point and Figure counts
    4. Counts on other box reversal charts
    5. Counts on log scale charts
    6. De Villiers and Taylor 3-box horizontal counts
    7. Risk and reward
    8. Another way of projecting targets – Fibonacci retracements
    9. Summary
  13. Chapter 6: Analysing Point and Figure Charts
    1. Implications of changing the construction parameters
    2. Choosing your chart parameters
    3. Drawing your first Point and Figure chart
    4. Showing gaps
    5. Other ways of determining box size
    6. Analysis of 3-box reversal charts
    7. Analysis using 1-box reversal charts
    8. Analysis of 2-box charts
    9. Stoplosses on Point and Figure
    10. Low-risk entries
    11. Summary
  14. Chapter 7: Point and Figure Charts of Indicators
    1. Point and Figure of Relative Strength
    2. Point and Figure of On-Balance Volume
    3. Point and Figure of oscillators
    4. Summary
  15. Chapter 8: Optimisation of Point and Figure Charts
    1. The case for and against optimisation
    2. Approaching Point and Figure optimisation
    3. Optimising for specific patterns
    4. Conclusion
  16. Chapter 9: Point and Figure’s Contribution to Market Breadth
    1. Introduction
    2. A caveat
    3. Bullish Percent
    4. Bullish Trend Percent
    5. X-Column percent
    6. Other Market Breadth Indicators based on Point and Figure
    7. Market Breadth on other markets
    8. Summary
  17. Chapter 10: Advanced Point and Figure Techniques
    1. Moving averages on Point and Figure
    2. Parabolic stop and reverse (SAR) on Point and Figure
    3. Bollinger Bands on Point and Figure
    4. Activity histograms
    5. Summary
  18. Chapter 11: Chart Examples
    1. Spot Euro Dollar (daily) 0.01 x 1
    2. Spot Euro Dollar (60 minute) 0.01 x 1
    3. Gold PM Fix 5 x 1
    4. Gold PM Fix 5 x 3
    5. Brent Crude Index (IPE) 2% x 1
    6. Brent Crude Index (IPE) 1% x 3
    7. MIB 30 Index 1% x 3
    8. Nikkei 225 Index 100 x 3
    9. Hang Seng Index 100 x 3
    10. DJ Euro Stoxx 50 1% x 3
    11. Infineon Technologies AG 2% x 3
    12. IBM 1% x 3
    13. Compuware Corporation 1% x 1
    14. Intel Corporation 0.25 x 3
    15. American Express Company 1.5% x 3
    16. Three Month Sterling Interest Rate Future (June 2005) (60 minute) 0.025 x 1
    17. Gold 15 x 3
    18. US 10 Year Yield 0.025 x 3
    19. Brent Crude $1 x 3
    20. Summary
  19. Chapter 12: Dividing your Stocks into Bullish and Bearish
    1. Adding relative strength to the search
  20. Conclusion
    1. References and Further Reading
  21. Appendix A: Construction of 2-Box Reversal Charts
  22. Appendix B: Construction of 1-Box Reversal High/Low Charts
  23. Appendix C: Construction of Log Scaled Charts