Member NASD/SIPC

Introduction to Point & Figure

and Candle Charting

MTA EDUCATION SEMINAR 2005

May 20, 2005

By Kenneth G. Tower, CMT
Chief Market Strategist, CyberTrader, Inc.

• Recipient of the Market Technicians Association's “Best of the Best”

Award in Point and Figure Chart Analysis.
 Intro to Point & Figure

April 26 – May 6, 2005

Point and Figure Charts: What Are They?

Oldest form of charting in the US

First written about by Charles Dow

Named "Point and Figure" by Victor deVilliers

Very Different from Bar Charts

Not Time Based
Based on Trading Activity
 Point and Figure Charts:
How Can I Profit From Them?

End Result:

Very Clear Display of Support and Resistance

Fewer Moving Average Whipsaws

 P & F Chart Intro
Chart Construction Example
$1 box size, 1 box reversal

40 X P&F FAQ
When do you update the chart?
ABCD trends up to 43:
X
X When do you change columns?
X
40 X Where does the volume show up

ABCD then trends down to 39:

X
XO
XO
40 XO
O
 P & F Chart Intro

Chart Construction Example

$1 box size, 1 box reversal P&F FAQ
What’s the Advantage?
40 X

ABCD trends up to 43: Some time periods are more

X important than others.
X
X
Stock patterns linked
40 X
directly to trading activity –
ABCD then trades like this: better reflection of the forces
X X of supply and demand.
XO X X X
XOX XOXOX X X
40 XOXOXO OXOXOX
O O O O O
 P & F Chart Intro

A big tech stock

April 26 – May 6, 2005
 P & F Chart Intro

A big tech stock

April 26 – May 6, 2005
 P & F Chart Intro

10:42am May 4 – 9:57 May 6, 2005

 P & F Chart Intro

7/23/02 – 5/12/2005

Base: $32 - $36

Aug ‘02 – June ‘03
 Introduction to
Point & Figure
Chart Conclusion
 Intro to
Candlestick Charts

A well known tech stock

March 15 – May 12, 2005
 Constructing the Candle Line

Bullish Candle Bearish Candle

White Real Body Black Real Body
High High
Upper Shadow
Close Open

Real Body

Open Close
Lower Shadow
Low Low
Chart courtesy of CandleCharts.com
 Drawing Candle Lines

28
Session Open High Low Close 27
1 23 26 21 25 26
2 26 28 23 27 25

3 23 27 22 22 24

4 25 28 22 25 23
22
5 27 27 25 25
21
1 2 3 4 5

Chart Construction Example

Chart courtesy of CandleCharts.com

 Bulls vs. Bears

The Real Body is the essence

of the price movement

Who’s in control?

Chart courtesy of CandleCharts.com

 Small Real Bodies:
Spinning Tops

Criteria:
With small real bodies,
known as “Spinning
Tops,” color is not
important.

Implication:
Signals that a prior trend
may be losing force.
Chart courtesy of CandleCharts.com
 Small Real Bodies:
Doji

Criteria:
With a doji, the open
and close prices are
the same.

Implication:
A signal that the
market is “tired”.

Chart courtesy of CandleCharts.com

 Real Bodies

Doji

Spinning Top

The green arrows

show the bulls
have control.
The doji session
altered this trend.

Spinning Top
DJ
DailyIndustrial Avg
Candles, 6/9/99 ($DJI)
to 7/30/99
 Intro to
Candlestick Charts

Info
• More info from same data as bar charts
• Use in concert with other technicals
• Be careful about using intraday candles
• ETFs more accurate than market averages
• Many other patterns
 Intro to
Candlestick Charts

A well known tech stock

March 15 – May 12, 2005
 Introduction to
Candlestick
Chart Conclusion
 Member NASD/SIPC

Introduction to Point & Figure

and Candle Charting

MTA EDUCATION SEMINAR 2005

May 20, 2005

By Kenneth G. Tower, CMT
Chief Market Strategist, CyberTrader, Inc.

• Recipient of the Market Technicians Association's “Best of the Best”

Award in Point and Figure Chart Analysis.