Demand breakouts dominate the first half , supply reasserts at resistance and holds Figure 54.1 , Demand breakouts dominate the first half , supply reasserts at resistance

A Point and Figure Chart encodes price action as a sequence of columns, each containing either X symbols (rising price, demand dominant) or O symbols (falling price, supply dominant). The x-axis is not a time scale , it is a column index. Time only appears as month markers on the first symbol of any new month, and these are informational annotations, not axis positions. The y-axis is the price scale. Two parameters control the chart's resolution.

Most financial charts plot price against time, which means quiet consolidation periods (low volatility, few price changes) take up the same horizontal space as high-activity periods. This time-scaling distorts the visual weight of price action: a three-week consolidation looks as wide as a three-week rally. The P and F chart eliminates this distortion by only advancing to a new column when a reversal occurs. Each column represents a price movement event , not a time period. Quiet markets produce no new columns; active markets produce many.

Box size and reversal amount are the two parameters the analyst controls, and they determine what the chart considers "signal" versus "noise." A smaller box size (e.g. $1) makes the chart more sensitive: more symbols per column, more columns, more reversals detected. The chart becomes wider and reveals more structure , useful for short-term trading. A larger box size (e.g. $5) filters out minor fluctuations, producing fewer, taller columns that represent only major price movements. This is better for detecting long-term trends and major support/resistance levels.

A Candlestick Chart encodes the same OHLC data but plots every session on the time axis regardless of whether meaningful price movement occurred. During consolidation phases, candlesticks produce a series of small, near-identical bodies that convey no directional information but consume significant chart space. The P and F chart collapses all quiet periods to nothing and expands only at decisive supply-demand shifts. A Line Chart on closing prices discards open, high, and low , and still suffers the time-scale distortion problem.

Paste this into Claude Code to generate a working version of this chart, plus its data file. The result will not be a perfect replica , the goal is that the reader can run the prompt, get a chart of this type, and read its source. Generate a complete, self-contained point figure in D3 v7. Two files:

The ideas in this chapter didn't appear from nowhere. Victor de Villiers co-wrote The Point and Figure Method of Anticipating Stock Price Movements in 1933 , formalizing a charting technique already in widespread floor-trader use, where columns of Xs and Os encode price moves without reference to time. Victor de Villiers, circa 1933. AI-generated portrait based on a public domain photograph (Wikimedia Commons).

The ideas in this chapter didn't appear from nowhere. Victor de Villiers co-wrote The Point and Figure Method of Anticipating Stock Price Movements in 1933 , formalizing a charting technique already in widespread floor-trader use, where columns of Xs and Os encode price moves without reference to time. Victor de Villiers, circa 1933. AI-generated portrait based on a public domain photograph (Wikimedia Commons).