👁️ Reading the Chart

A P&F chart consists exclusively of two characters:

• X — rising prices: each X corresponds to a rise of one box size
• O — falling prices: each O corresponds to a drop of one box size

A column always contains only one character. When an X column is active, X's grow upward. When an O column is active, O's grow downward.

How a Reversal Is Triggered

A switch from an X column to an O column (or vice versa) is called a reversal. It is triggered as soon as the price moves at least reversal amount × box size in the opposite direction.

Example: Box size = $2, reversal = 3 boxes. Price in X column at $100. Only when it falls to $94 (3 × $2 = $6) does a new O column begin — and a new column is recorded to the right.

The following P&F chart shows an uptrend with pullback and buy signal. Box size: $2, reversal: 3 boxes.

Golden cell = buy signal (Double Top Breakout at $104 — first X row above the previous X column highs at $102).

P&F charts have two characteristic trend lines that always run at a 45-degree angle:

These 45-degree lines are not drawn trend lines like in a candlestick chart — they are mechanically constructed and provide objective trend status signals.