learning to read price action with p/f charts

Hi Kimo,

It is possible what you see, but it is not what you want. PnF charts are merely about patterns and trends.

And as response on your previous question 1, no 'x' and '0' are only drawn when new prices occur, not when time moves on! PnF charts are charts without time!!! But they are still 2 dimensional ;-)
And to answer your question 2, go over to elitetrader and find the thread "Learning to read Price Action with P&F Charting" by holygrail, it gives you a nice introduction into the PnF charts. But to really understand it I would like to recommend you the book from Jeremy du Plessis as Dentist points out too.

In my previous chart you saw that it ended being in an uptrend. Now some time later I made another screenshot of the same chart, no trend lines have been changed, only added.

What do we see on this new chart:
At the green arrow we see a triple top sell signal at exactly the point of the drawn trend line. If we say that the line is drawn at the right place then this means a change in trend, putting it into a down trend from now on. And this is a very important happening by the book in the PnF world! Except that the trend line isn't in an angle of 45%. Because of this happening we draw a falling trend line from the last top. We are SHORT now.

What we see then is a retracement after 2 more up columns that shows a triple top buy signal. Also at the place where we have drawn a trend line. So we go LONG now. And we draw a trend line from the last bottom...
Or we say that the last blue increasing trend line was not drawn at the right place???
So what shall it be...?
I say it wasn't drawn at the right place, so I draw the orange trend line. If this is the case then the last two positions shouldn't been taken! We should be long since the blue arrow pointed at the 5 top breakout!

Then at the black arrow we see another possible sell signal...
At first we see that there is some resistance around the orange line, but finally it got broken, checked again and then it seems to go down. So we can draw a falling trend line above the last top. Question will be how steep shoot it be?

And the biggest question is, where should we have closed the uptrend? And when should we take another short position?

I hope I started a nice discussion, and I am very curious what you guys would have done in these cases? What trends would you have taken? Where would your stops be? And why would you have done it?

Cheers,
Emotion

Good advice Emo' with one notable exception - there's no need to send peeps over to ET for a solid intro to P&F - we have it all here!

Point and Figure Charting: Part 1 - The Basics
Point and Figure Charting: Part 2 - The Bits That Aren't As Basic
. . . and if the first two articles get your juices flowing, you can go on to this:
Point & Figure Gone High Tech
Enjoy!
Tim.

emotion..i dont think that ninja trader is right for p/f day trading.first of all,the "x" and the "o" must be properly formed and not squat or elongated.so that means you can draw the 45 degree trendlines to show the trend properly.i know from other ninja users,that they are going to rejig the p/f at some point.keep to 45 degree trendlines.you get a better feel
the other thing is that they must be calculated properly.so that you can look at close and hilo plot.so therefore,you can look at all aspects.althought,in day trading,a good starting point is 1 min close plot.make sure the columns are not too long
the solution is....dont use ninja for the final decision,especially with the tick plot
if you have iq feed,there is a simple solution.buy bullseye/cost $149.then add "qcollector" which is $99.you can then programme in qcollector to get any data you want,ie tick,1minute etc.it is slightly limited.but carl,the owner of bullseye is soon to come out with a real time version
even better.use updata at $75 a month.it will take iq feed

fom duplessis

and this also

so this is the result
nasdaq 100
10 min data plot
from last week
see how easy it is to read

eurusd
last week
10 min data plot.see how easier it is to read