Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74–89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
A Point and Figure (P&F) chart is a type of price chart used in technical analysis that records only significant price movements — filtering out time and minor fluctuations entirely. Unlike candlestick, bar, or line charts, a Point and Figure chart does not have a time axis. Instead, it uses columns of X’s (representing rising prices) and O’s (representing falling prices) to plot only price moves that exceed a defined threshold, called the box size. A new column only begins when price reverses by a specified minimum amount, called the reversal amount. Point and Figure charts are prized for their ability to strip away market noise, reveal pure supply and demand dynamics, and generate clearly defined price targets and signals.
Broker Review Contents
What Is a Point and Figure Chart?
Most traders are accustomed to charts where time flows across the horizontal axis — every candle, bar, or data point represents a fixed period of time, whether one minute, one hour, or one day. Point and Figure charts discard this convention entirely. Time is irrelevant in a Point and Figure chart. What matters is only price movement — and only price movement that is significant enough to exceed the defined box size threshold.
This philosophy makes Point and Figure charting one of the oldest and most unique approaches to market analysis. By removing time from the equation and filtering out small price fluctuations, Point and Figure charts produce a clear picture of the battle between supply (sellers) and demand (buyers), showing only the moves that actually matter.
The result is a chart that can stay static for a long time during consolidation — and then suddenly generate a new column when a meaningful directional move occurs. This responsiveness to price action rather than clock time makes P&F charts particularly valuable for identifying genuine breakouts, trend directions, and support/resistance levels that are obscured by noise on time-based charts.
Point and Figure charts are available on TradingView and on some charting platforms offered by brokers reviewed on CompareBroker.io. For traders who want to apply this methodology, the Compare Forex Brokers page can help identify brokers with the best charting tools and platform variety.
The History of Point and Figure Charting
Point and Figure charting is among the oldest documented forms of technical analysis. Its origins trace back to the late 19th century — predating candlestick charts’ widespread adoption in the West by nearly a century.
The earliest known reference to Point and Figure methodology appears in Charles Dow’s writings in the 1880s and 1890s, and the technique was described in detail by trader Victor de Villiers in his 1933 book The Point and Figure Method of Anticipating Stock Price Movements. The original method used only X’s (not O’s) and recorded every price tick, making charts extremely sensitive.
Over time, the method evolved:
- The dual-column system (X’s for rises, O’s for falls) became standard.
- Box sizes were standardised to filter noise.
- Reversal rules were formalised.
- Geometric price scaling was introduced for longer-term charts.
Today, Point and Figure analysis remains a respected methodology among institutional analysts and technically-oriented traders. Major charting platforms including TradingView support P&F charts as a standard chart type. While less commonly used by beginners than candlestick charts, P&F methodology is widely taught in professional technical analysis programmes and is part of the Chartered Market Technician (CMT) curriculum.
How Point and Figure Charts Work: X’s, O’s, Box Size, and Reversal
Understanding a Point and Figure chart requires grasping three fundamental concepts: X’s and O’s, box size, and reversal amount.
X’s and O’s
- X columns represent rising prices. Each X represents price moving up by one box size.
- O columns represent falling prices. Each O represents price moving down by one box size.
All activity within a single column represents price moving in one direction. X columns always go upward; O columns always go downward. On a P&F chart, X and O columns always alternate — you will never see two consecutive X columns or two consecutive O columns.
Box Size
The box size is the minimum price increment that must be exceeded before a new X or O is added to the current column. It acts as a noise filter.
- A smaller box size makes the chart more sensitive — it records more price movements and creates more columns. Better for short-term analysis but more noise.
- A larger box size makes the chart less sensitive — only larger moves register. Better for long-term trend analysis with fewer false signals.
Box sizes can be set as:
- Fixed value (e.g., 10 pips on EUR/USD)
- Percentage of price (e.g., 1% of the current price)
- ATR-based (using the Average True Range to set a volatility-adjusted box size — the most sophisticated approach)
Reversal Amount
The reversal amount (almost always expressed as a multiple of the box size, typically 3) defines how far price must move in the opposite direction before a new column begins.
With a 3-box reversal:
- If price is currently in an X column (rising), it must fall by at least 3 box sizes before a new O column begins.
- If price is in an O column (falling), it must rise by at least 3 box sizes before a new X column begins.
The reversal requirement prevents the chart from switching columns on every minor fluctuation — it only registers a new column when there is a meaningful directional change.
How a New Column Forms — Step by Step
- Price is in an X column at $100. Box size = $1. Reversal = 3 boxes ($3).
- Price rises to $104 → four X’s added to the column.
- Price then falls to $101 → a fall of $3, which equals the reversal threshold.
- A new O column begins immediately to the right of the X column, starting one box below the last X.
- Price continues falling to $98 → three more O’s added.
- Price then rises to $101 → a rise of $3 triggers a new X column.
How to Read a Point and Figure Chart
Reading a P&F chart is straightforward once you understand the mechanics:
Current column direction: If the rightmost column is made of X’s, price has been rising recently. If it is made of O’s, price has been falling.
Column height: A tall X column (many X’s) indicates a sustained, strong upward move. A tall O column indicates sustained selling pressure.
Width of pattern: How many columns a consolidation pattern spans tells you how long buyers and sellers have been fighting at a particular level — wider patterns generate more powerful measured-move targets.
Support and resistance: Horizontal levels where X columns have repeatedly peaked or O columns have repeatedly bottomed represent resistance and support respectively — exactly as on time-based charts.
Trend lines on P&F charts: A 45-degree uptrend line (the “bullish support line”) can be drawn from the lowest O in the most recent downtrend. As long as price stays above this line, the trend is bullish. A 45-degree downtrend line (the “bearish resistance line”) can be drawn from the highest X. As long as price stays below it, the trend is bearish.
Point and Figure Chart Signals and Patterns
Point and Figure charts generate their own set of specific buy and sell signals based on classic formations.
Basic Buy and Sell Signals
Simple Buy Signal: A column of X’s rises one box above the top of the previous X column. This is the most basic bullish breakout signal on a P&F chart.
Simple Sell Signal: A column of O’s falls one box below the bottom of the previous O column. This is the most basic bearish breakdown signal.
Double Top Breakout (Buy Signal)
Price forms two X columns that reach the same high, then a third X column breaks above both — a classic double top breakout structure (note: on P&F charts, this is actually a bullish double top breakout because it breaks above the prior highs, in contrast to the bearish double top on time-based charts).
Double Bottom Breakdown (Sell Signal)
Price forms two O columns that reach the same low, then a third O column falls below both — a bearish breakdown below a double support level.
Triple Top Breakout (Strong Buy Signal)
Three X columns reach the same high, and then a fourth X column breaks above all three — a high-conviction bullish signal indicating powerful, sustained buying interest.
Triple Bottom Breakdown (Strong Sell Signal)
Three O columns reach the same low, then a fourth O column falls below all three — a high-conviction bearish signal.
Bullish and Bearish Catapult
A catapult signal combines a double/triple top breakout with a subsequent retest that holds, followed by another breakout — confirming extremely strong momentum.
Head and Shoulders on P&F
The head and shoulders pattern also appears on Point and Figure charts — three columns where the middle X column is the tallest, flanked by two shorter X columns. The neckline break (an O column falling below the base of the formation) confirms the bearish reversal.
Price Target Calculation: The Vertical and Horizontal Count
One of the most powerful features of Point and Figure charting is its ability to generate objective price targets directly from the chart geometry.
The Vertical Count
The vertical count is based on the height of a single breakout column:
- Count the number of X’s in the breakout column.
- Multiply by the box size.
- Multiply by the reversal amount (typically 3).
- Add to the breakout low of the X column.
Example: A breakout X column has 8 X’s. Box size = 10 pips. Reversal = 3. Target = 8 × 10 × 3 = 240 pips added to the base of the breakout column.
The Horizontal Count
The horizontal count uses the width of a consolidation pattern:
- Count the number of columns in the consolidation base.
- Multiply by the box size.
- Multiply by the reversal amount.
- Add to (for bullish targets) or subtract from (for bearish targets) the breakout level.
Example: A base formation spans 10 columns. Box size = 10 pips. Reversal = 3. Target = 10 × 10 × 3 = 300 pips added to the breakout level.
The horizontal count is generally considered more reliable for longer-term targets; the vertical count is more common for shorter-term moves.
Box Size and Reversal Settings: How to Configure P&F Charts
The most common default settings for Point and Figure charts are:
Setting | Default | Effect |
Box size | Varies by instrument | Determines noise filter threshold |
Reversal | 3 boxes | Determines when a new column begins |
Scale | Arithmetic or logarithmic | Arithmetic for shorter-term; log for long-term |
For forex majors (EUR/USD, GBP/USD, etc.):
- Short-term analysis: Box size 5–10 pips, 3-box reversal
- Medium-term: Box size 15–25 pips, 3-box reversal
- Long-term: Box size 50–100 pips, 3-box reversal
ATR-based box size is increasingly popular among professional traders. Using the Average True Range (ATR) as the box size dynamically adjusts the chart’s sensitivity to current volatility — automatically tightening during calm markets and widening during volatile periods.
Point and Figure vs Candlestick Charts
Feature | Point and Figure | Candlestick |
Time axis | None | Fixed time periods |
Noise filtering | Automatic (box size) | Manual (timeframe selection) |
Pattern recognition | P&F-specific patterns | Standard candlestick patterns |
Price targets | Built-in (vertical/horizontal count) | Measured move method |
Volume display | Not standard | Can be shown below chart |
Learning curve | Moderate | Low (widely familiar) |
Best use | Trend direction, S/R, targets | All-purpose, entry timing |
Candlestick charts — the most widely used chart type among retail forex traders — provide rich visual information about price behaviour within each period. P&F charts sacrifice this intraperiod detail in exchange for a cleaner representation of the underlying supply/demand dynamic.
Many professional traders use P&F charts for strategic analysis (where is the major trend, what are the key support/resistance levels, what is the price target?) while using candlestick charts for tactical entry timing (what does the recent price action look like for entry timing?). For brokers with the best multi-chart platform support, see Compare MT4 Brokers and Compare All Brokers on CompareBroker.io.
Point and Figure vs Renko Charts
Renko charts are the most commonly cited alternative to Point and Figure charts, as both filter time and focus purely on price movement.
Feature | Point and Figure | Renko |
Units | X’s and O’s (stacked) | Bricks (fixed-size blocks) |
Reversal mechanism | Multi-box reversal threshold | Single brick in opposite direction |
Noise filter | Box size × reversal amount | Brick size only |
Pattern types | P&F-specific patterns | Standard trend and S/R analysis |
Target generation | Vertical and horizontal count | Measured move only |
Visual style | Grid-based symbols | Brick-based blocks |
Both Renko and P&F charts filter time and noise, but P&F’s reversal mechanism (requiring a multiple of the box size to reverse) produces fewer columns and focuses on more significant direction changes. Renko charts tend to be visually simpler and more accessible for traders transitioning from candlestick charts.
Advantages of Point and Figure Charts
Noise elimination: The box size and reversal requirement filter out minor price fluctuations that create false signals on time-based charts. Only meaningful moves appear on the chart.
Clear support and resistance: Because P&F charts only record significant moves, the levels where price repeatedly stalls become immediately visible — without the visual clutter of time-based charts.
Objective price targets: The vertical and horizontal count methods generate precise, objective price targets directly from the chart — no guesswork required.
Trend clarity: The relationship between X and O columns makes trend direction visually unambiguous. A series of X columns making higher highs and O columns making higher lows is an uptrend. The reverse is a downtrend.
Time-independent: A P&F chart of EUR/USD doesn’t care whether a price move took two hours or two weeks to complete — it records only the magnitude. This neutralises the distortion created by low-volatility periods on time-based charts.
Reduces overtrading: Because P&F charts only signal when meaningful price movement occurs, they naturally discourage impulsive, noise-driven trades.
Limitations of Point and Figure Charts
No volume information: Standard P&F charts do not display volume, which means one of the most important confirmation tools in technical analysis is absent. Volume-weighted P&F variants exist but are rarely available on retail platforms.
Less familiar: The vast majority of retail traders and online communities use candlestick charts. P&F charts require a learning curve and are less discussed in mainstream trading education.
Box size selection is subjective: While ATR-based settings help, choosing the right box size for a given instrument and timeframe involves judgment. The wrong box size produces either too much noise (too small) or misses significant moves (too large).
Not suitable for every broker’s platform: Point and Figure charts are not available on all MT4 or MT5 setups. Traders specifically interested in P&F analysis should verify platform support before choosing a broker — the Compare All Brokers directory on CompareBroker.io notes platform capabilities for major regulated brokers.
How to Use Point and Figure Charts in Forex Trading
Point and Figure charting is particularly well-suited to forex analysis because:
- The forex market operates 24 hours, making time-based charts on short timeframes extremely noisy
- Major currency pairs like EUR/USD, GBP/USD, and USD/JPY move in clearly defined price ranges that P&F box sizes can capture effectively
- The horizontal count method works well for measuring potential moves between major support and resistance zones
Practical workflow for forex traders:
- Set up a P&F chart on your major pairs using an ATR-based or fixed box size appropriate for current volatility.
- Identify the current column direction (X = up, O = down) and the most recent breakout signal.
- Draw 45-degree trend lines to determine the overall bias.
- Calculate the horizontal count target from the most recent consolidation base.
- Switch to a candlestick chart on a lower timeframe (H1 or H4) to time entries at the P&F-identified support/resistance levels using standard candlestick patterns and indicators like the Williams %R, Stochastic Oscillator, or CCI indicator.
For traders who want to test P&F charting in a risk-free environment before applying it with real capital, a demo account is the recommended starting point. Compare the best options at Compare Forex Demo Accounts on CompareBroker.io.
Frequently Asked Questions
What does X and O mean in a Point and Figure chart? X’s represent rising prices — each X means price has moved up by one box size. O’s represent falling prices — each O means price has moved down by one box size. Columns of X’s are bullish (demand in control). Columns of O’s are bearish (supply in control).
How do I set the box size for a Point and Figure chart? For forex majors, a common starting point is 10–20 pips per box with a 3-box reversal for medium-term swing trading. For shorter-term analysis, use 5–10 pips. For longer-term views, 50–100 pips. ATR-based box sizing (using 14-period ATR divided by a factor of 3–5) dynamically adjusts the sensitivity to current market volatility and is widely considered the most robust approach.
What is a 3-box reversal in Point and Figure? A 3-box reversal means that price must move in the opposite direction by at least 3 box sizes before a new column begins. If the box size is 10 pips, price must move 30 pips in the opposite direction to trigger a new column. This is the most common reversal setting and provides a good balance between sensitivity and noise reduction.
Is Point and Figure charting good for beginners? Point and Figure charts have a moderate learning curve. Beginners typically start with candlestick charts and add P&F analysis once they are comfortable with basic chart reading. The concepts are logical, but the unfamiliar visual format can be confusing at first. Practising on a demo account with P&F charts alongside candlestick charts is the recommended approach. See Compare Forex Demo Accounts for the best practice environments.
Which platforms support Point and Figure charts? TradingView is the most widely used platform supporting full Point and Figure chart functionality with customisable box sizes and reversal settings. Some broker-specific platforms also support P&F. MT4 and MT5 do not have native P&F chart support, though custom indicators exist. See Compare All Brokers for brokers with the widest platform options.
How do you calculate a price target from a Point and Figure chart? Use the vertical count: multiply the number of boxes in the breakout column by the box size, then by the reversal (usually 3), and add to the column base for a bullish target or subtract for a bearish target. Use the horizontal count: multiply the number of columns in the consolidation base by the box size and by the reversal, then add (bullish) or subtract (bearish) from the breakout level.
Related Resources on CompareBroker.io
- 📊 Compare Forex Brokers — Find the right broker for technical chart trading
- 📊 Compare Forex Demo Accounts — Practice P&F charting risk-free
- 📊 Compare All Brokers — Browse 100+ regulated broker reviews and platform features
- 📊 Compare ECN Brokers — Best execution for breakout and signal trades
- 📖 What Is a Head and Shoulders Pattern? — A pattern that also appears on P&F charts
- 📖 What Is a Double Top Pattern? — Double top/bottom breakouts on P&F charts
- 📖 What Is a Double Bottom Pattern? — Bullish P&F breakout reference
- 📖 Williams %R Indicator Guide — Momentum tool for P&F signal confirmation
- 📖 Stochastic Oscillator Guide — Timing entries at P&F levels
- 📖 What Is CCI Indicator? — Momentum confluence for P&F breakouts
- 📖 How to Compare Forex Brokers — Evaluate brokers before committing capital
Risk Warning: Trading CFDs and forex involves significant risk of loss. This article is for educational purposes only and does not constitute investment advice. Always trade with a regulated broker and only risk capital you can afford to lose.
