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35 Chapter 11: Five-Point Patterns -1-1 | / In | | / r | Mi VI \r\K w \ - \ ii i | | | | | | | | |
1/99 1/00 1/01 Figure 11.4 NASDAQ Composite, three years, 20 percent filter. Too filtered-important detail is being lost. 5500  1/99 1/00 1/01 Figure 11.5 NASDAQ Composite, three years, 30 percent filter. Shows just the really big picture. (Filter lines curved due to log scaling.)
88 Part III: Bollinger Bands on Their Own  1/99 1/00 1/01 Figure 11.6 NASDAQ Composite, three years, 40 percent filter. This is way too filtered; no signal left. exchange floor. Today they are marked with Xs for upswings and Os for downswings. The original "figure" charts are thought to have used the actual figures-3,21,57, etc.-in the boxes to record price action. Floor traders wrote them by hand on the backs of trade tickets. Then came point-and-figure charts composed with Xs plotted in both directions, but with 0s and 5s when the price ended in 0 or 5; deVilliers and Wheelan, published analysts, both used this method (Figure 11.7). The modern process of keeping a point-and-figure chart is fairly simple, and the charts can be kept easily by hand (Figure 11.8). Xs are placed successively higher in a column of boxes as price rises; then as price falls, Os are placed in the next column to the right. The transition from a rising column of Xs to a falling column of Os is triggered by a reversal that exceeds a predetermined limit, usually a number of boxes, most often three. The opposite is true for a transition from Os to Xs. Point-and-figure practitioners have long faced the problem of selecting an appropriate filter or box value. They generally use a rule based on the price of the stock. At low price levels each box
Chapter 11: Five-Point Patterns | | | | | | | | | | | | | POINT CH | | » \ W r, --+1* | F> » > »jC 11 1 N * If" -Hf5-4 | | | | | | | - | ft H. ft f/i | | E P- 4 * * n P • r j-* | | | | 1 1 fell 1X * | | ,--- iSI r * l-fei-- | ibHH- p If *"- | | --> | | | | ><<1 , r i-x 1 i | JE PP 1 LP | ¹ | | | 1 n p 1 | | | --r*1 | | | | | | | | | | | | | | | | | | | | -hTh f hi t J «I | | | 111-4 E Eb | | | | | | | 1 IPX 1 *r - " | | p 3 E I -Hi-1 | > I lr I- »}- | | | | 1 V If i « * p- | | | | (Hf I .!- | | | | -« | If * p f | | | | KIT J | | | | -f*1 | - CO | REE POINT CHART * ] ¹ flF TMF------ | 5 POIN | CHART | | | | ABOVE OUt POINT CHART -1-1-!- | | |
2600 2500 £100 2600 £500 MOO | | | | | | | | | | | | | | 1 p h | | | | | | | | | | | | j | V p V> Pi □ j chut l"I " II 1 t P uuin | «1 # T * MHn » | F Lj : :i: | -: I f IKK J j " jl x Li] i . ::t | | | | | | m. H 7 - | !> V | » V | | | | | IP * * ; t:", is: j | 5 t • 1 * IIP r Jhhp V 11 I -1 utx. - | ¥k ee | 1! 5 in | | I* | ) POINT IT CHART | " i | | | | | | | | | | | | | | | | | 4 ce ma | | | | • il m ! P f .-.a - " *-*-P 41 1 *X. | " * in f)< ll* fjj" H | | 10 POINT UNIT CHAR CONDENSATION OF Tl )VE 10 POINT UNIT Ct- | | - { | | | | 1 | | i i |
Figure 11.7 Point-and-figure chart from Wheelan. [source: Study Helps in Point and Figure Technique by Alexander H. Wheelan, originally published by Morgan, Rogers, and Roberts (New York, 1947), reprinted by Fraser Publishing (Burlington, Vt., 1989).]
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