NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
In a Point and Figure chart, which of the following is the factor that determines when a new column of the opposite type is started?
A Point and Figure chart starts a new column of the opposite symbol when price reverses by the chosen reversal amount, typically three boxes. Time and volume are ignored, so only price movement of sufficient size changes the column.
- APassage of a fixed time period such as a day
- BA reversal of the price by the specified number of boxes, called the reversal amountCorrect
- CA change in traded volume
- DThe close of the market each Friday
Explanation
Point and Figure charts ignore time and volume. A new column of Xs or Os begins only when price moves opposite to the current column by the reversal amount (commonly three boxes). Time-based or volume-based triggers are features of other charts.
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