Learn Trading Under The Guidance of Vivek Bajaj + 4 Mentors - Know More

Point and Figure Charts

Counts on 1-Box Reversal Charts

Firstly, let us start with 1-box reversal charts. 


It is not possible to conduct vertical counts on 1 -box reversal charts, because, as you have seen earlier, columns can contain both Xs and Os, so only horizontal counts are possible. 


These horizontal counts are not quite as effective as counts on 3-box charts, partly because the counting method is not as precise.


The logic behind the count is that the width of the pattern determines the extent of the subsequent move, and the area where most of the action has taken place is the level at which the count is taken. This is the pivot or anchor point, about which the pattern balances.


One advantage of horizontal counts on 1 -box charts, however, is that they can be used effectively for counting across any congestion pattern, including continuation patterns. Every pattern yields a valid upside as well as a downside count. Once obtained, you must decide at the time the breakout occurs whether it is the upside or the downside that is activated.


How to establish a horizontal count on 1 -box reversal charts


Step 1 - Look for a congestion pattern you must look for a congestion pattern, which could be a top, a bottom, or a continuation pattern.

At the time of counting, you may not actually know what it is. It is only when the price breaks out of the pattern that you will. It is for this reason that every pattern yields valid upside, as well as downside, counts up until the breakout. 


Step 2 - Measure the width of the congestion pattern using the following rules:

There are four methods used to measure the width of the pattern in no particular order.


Method 1

Count the number of columns in the row that has the most filled boxes, that is to say the row with the most Xs and 0s. This is where most of the price action has taken place and, therefore, where the strongest part of the pattern is. It is the level that has been crossed the most times and can be regarded as the anchor point for the pattern. The number of boxes in the row is counted from the far left to the far right of the pattern, including any empty boxes that do not have an X or 0. You are, therefore, measuring the total width of the pattern based on the width of the row you have chosen. The logic is that the more times a price level is passed through within the congestion pattern, the more important that price becomes in defining the width of the pattern. Please note that the row with the most filled in boxes is not necessarily the longest row in the pattern. You are not counting the longest row; you are counting the length of the row that has the most activity within the pattern.


Method 2

Count the width of each row within the pattern and divide by the number of rows to give the average row width, rounded up to a full box size. The trigger row is taken to be the row in the middle of the pattern.


Method 3

If the pattern has 'walls', that is to say a clear column entering the pattern and a clear column exiting the pattern, then count the number of columns in the pattern, the right-hand wall across to, and including, the left hand wall.


Method 4

Method 4 Count the width of the pattern (number of columns) at the breakout or catapult point. This will either be the width between the entry and exit walls at the catapult point, or, if none exist, it will be the width of the pattern one row below the catapult point.


Step 3 – 

Project the count up and down by an equal number of boxes Multiply the number of columns calculated in step 2 by the box size (the value of each X and 0).

Add this number to the value of the box in the row from which the count was taken, to achieve an upside target.

Also subtract this number from the value of the box in the row from which the count was taken, to achieve a downside target.

If the pattern has already broken out then you will already know the direction, so only the target in the direction of the breakout is valid.


Horizontal counts on a 1 -box reversal chart showing rows that may be counted.

Did you like this unit?

Units 21/28