NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
In a point-and-figure chart, what causes a new column of the opposite symbol to be started?
A new column starts when price reverses by at least the reversal amount, which is the box size multiplied by the number of boxes required, commonly three. Point-and-figure charts disregard time and volume, so only sufficient price movement against the current column triggers a switch between X and O.
- APassage of a fixed time period such as a day
- BA price reversal equal to or greater than the reversal amount (box size multiplied by reversal count)Correct
- CA rise in traded volume above its average
- DA gap between the previous close and the next open
Explanation
Point-and-figure charts ignore time and volume. A new column of X or O begins only when price reverses by at least the set reversal amount, typically three boxes. Time-based or volume-based triggers do not apply to this chart.
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