Point and Figure charting may be the oldest method of charting the market in the Western world but, as Jeremy du Plessis is keen to tell us, that does not mean it should be overlooked as a technique by chartists in the twenty-first century. In this revised and expanded second edition of his Definitive Guide, du Plessis shows why ? making a strong case for Point & Figure as the most vital, and most useful, technical analysis tool around. Whether you are as yet unfamiliar with Point & Figure, or have dabbled and know a little, or feel that you are already familiar with the technique but would like to know more ways to apply it, this comprehensive guide is for you.
Point and Figure charts are unique to Technical Analysis and they are unique within technical analysis. No other discipline uses a technique like this and in technical analysis itself no other chart or approach looks the same or uses quite the same method of construction. So unusual are Point and Figure charts that most students of Technical Analysis avoid them completely, but this is a mistake as they can enhance market analysis and improve trading.
There are many books on Point and Figure available, so why did du Plessis feel the need to write another? He explains that of all the books he knows, none give a detailed coverage of the original 1-box reversal charts. These charts are where Point and Figure began and this book goes into more depth on traditional Point and Figure charts than any other book I have read. The purpose of this is to ensure that you understand the history, development, calculations and the analysis of Point and Figure charts; these basics are essential in order that a chartist fully understands how to apply the technique.
This book starts by describing the history of how Point and Figure developed. This is useful background as it explains how Point and Figure charts do what they do. The author then moves on to the construction of Point and Figure charts, the patterns and signals they produce, and how to use trendlines with the charts. The focus then moves to analysing the charts, including how to project price targets, the implications of changing the chart parameters and then a step-by-step walkthrough analysis of the FTSE 100 Index and the NASDAQ Composite indexes. In the final chapters, du Plessis looks at how to optimise Point & Figure charts, advanced techniques for use when the basis have been grasped and a chapter full of real-life chart examples that employ the theory described throughout.
The enhancements made for this second edition are as follows. In addition to the Point & Figure chart construction methods already covered in the first edition, two new construction methods have been added in the shape of the low/high and ohlc methods. The author has also dedicated more space to explaining the parameters that are required to draw a Point and Figure chart and then how to choose the correct parameters in particular circumstances. The implications of showing gaps on Point and Figure charts and how this can provide more information about any column is also covered in more detail.
Two new Market Breadth indicators based on Point and Figure are also covered ? Bullish Trend Percent and X-column Percent. Both of these give a different perspective on Market Breadth measurement and analysis. Horizontal Activity histograms are also introduced; these are based on price activity and volume at each Point & Figure box level. These histograms give additional information about the strength of support or resistance at any level.
Point and Figure is a graphic representation of the supply and demand, and the fear and greed, that is part of the market. It is almost as if the Point & Figure chart is the mouthpiece or voice of the market. As such, technical analysts cannot afford to be without a working knowledge of Point and Figure and du Plessis? guide does an excellent job of building this.