NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
In a point-and-figure chart, which of the following is used to decide when a new column is started?
A new column in a point-and-figure chart begins when price reverses by at least the preset reversal amount, usually three boxes. The chart ignores time and volume, so only price movement of sufficient size changes the column from X to O or the reverse.
- APassage of a fixed time period such as a day
- BA reversal in price equal to or greater than the reversal amount (number of boxes)Correct
- CTrading volume exceeding its average
- DA moving average crossover
Explanation
Point-and-figure charts ignore time and volume. A new column (X to O or O to X) begins only when price reverses by at least the chosen number of boxes, commonly three. Time-based or volume-based triggers are not used.
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