Forex Focus  |  FEB 2008

Forex Focus: Point & Figure For Forex by James Chen, CTA

Forex Focus: Point & Figure For Forex by James Chen, CTA Here’s an age-old charting technique that you can use effectively in the foreign exchange markets. To trade using point & figure charts is to trade based on pure price action. One of the best-kept secrets about this granddaddy of technical analysis charting methods lies in the fact that it is ideally suited to analyzing and trading the forex market. THE BASICS Point & figure (P&F) charts originated in the 19th century as an innovative method for graphically plotting price action in the financial markets. One of the unique aspects of P&F charting is that generally, only the most important aspect of technical analysis — price — is recorded on the charts. Unlike the more widely used bar or candlestick charts, P&F charts customarily exclude volume, time, and open/close delineations. After all of this is left out, that which remains is just the purity of price action. With only price as the sole analytical factor, P&F charts are uniquely capable of revealing a clearer, less muddled representation of such vital technical analysis dynamics as trend, support/resistance, and breakouts.

by James Chen, CTA