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This indicator was created for display "Point and Figure" (XO) charting in MT4. The book "POINT AND FIGURE CHARTING"

The Essential Application for Forecasting and Tracking Market Prices "by Thomas J. Dorsey was used in drawing up the algorithm.

It’s necessary to note that the choice of different Timeframes, "Point and Figure" (XO) charting will be created different. This is due to the fact that the choice charts of M1 and D1 for the same period (say, 2 days), in the case of M1 timeframe will be much more detailed.

External variables:

extern color up_color = RoyalBlue; / / color X
extern color down_color = Crimson; / / color O
extern color border_color = Black; / / border color
extern int border_width = 2, / / frame width
extern int size = 20, / / height of a single X or O
extern int reverse = 3; / / reversal parameter
extern int width = 3, / / width of a single X or O in bars
extern int bars = 1000; / / number of bars to calculate, 0 - all bars


The primary feature of the Point Figure chart is that is disregards time and carries for price only. This is the way in which Point Figure chart is created.

Rule one: Right from the start we define a certain box size and then draw only those changes in price which are equal or greater.
Rule two: in each column we can draw either points, for upwards price movements, as represented by “X’s”or figures, for price drops, as represented by “O’s” , but not both.
Rule three: in order to start drawing a new column there should be a change in price with equals the box size multiplied by the reversal amount.
Rule Four: all fractional changes are rounded down to the next whole number.


Let’s look at an example.
The daily high for day 1 equals 180 points.
The box size is equal to 2 points. The reversal amount equals 3 points.
Let’s assume that we have the following subsequent prices. The closing price for 2 – 185 is greater than the previous high 180 by 5 points. This is 2/5 times greater than our box size. After rounding a 2/5 down to 2 we draw 2 points or exec in our chart.
The closing price for day 3 – 186 equals the previous high – 186.
Therefoer we draw nothing.
The closing price for 4 – 180 is less than the previous low – 186 by 6 points.
We multiply our box size of two by the reversal amount of 3 giving us a total of six.
The six equals our price move of 6 points being enough to start a new column with figure or ows.

Like the Kagi, Renko and Three Line Break charts, Point and Figure charts attempt to illustrate supply and demand.
A column of points symbolizes a victory of bulls over bears, or the prevailing of demand over supply.
Conversely a column of figures belongs to the bears.
Just as Candlesticks, Point and Figure charts form study pattern.


Here are some of the basic patterns.

Double Top. This is when a new column of Points exceeds the previous one.

Triple Top. When a new column of Points excceds the two previous columns.

Double Bottom – when a new column of figures falls below the previous column.

Triple Bottom – when a new column of figures falls below the two previous columnts.

Bullish Catapult. This is a combination of the triple and double tops.

Bearish Catapult is a combination of the triple and double bottoms.

And Shake out – after a double top a double bottom occurs. This is considered the moment when the “weak” traders sell. If there follows 3 new points this is considered to be a good time to open long positions, in the anticipation of a third top to form.  The Shakeout ends when the third top ceases.

Attachments:

Point and Figure indicator

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