Point and Figure Fundamentals

This chapter discusses various fundamentals of point and figure method in technical analysis. The point and figure method of analyzing stock movement has been designed simply as a logical, organized way of recording this battle between supply and demand. This chapter refers to tennis and football in explaining several of the market indicators and stock chart patterns. This chapter uses plotting of a stock as a basis for explaining how to chart, which in turn is expected to help in the plotting of mutual funds and commodities. The point and figure chart uses only the price action of the stock—volume is not a consideration. It is stated that much of the volume in stocks today is related to option strategies and hedge fund activities that have nothing to do with a bet on the direction of the stock. Price objectives in point and figure technical analysis are derived through two methods called the horizontal count and the vertical count.