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PnF charts

edited December 2017 in Using Technical Analysis
If PnF charts rely solely on price movements and not time intervals, why are there daily, weekly and monthly options in the chart attributes section of the PnF chart?

Maybe I’m answering my own question, but are the different PnF timeframes just a reflection of the candlestick chart of the same timeframes? If so, how is that better/different?

It seems that different timeframes produce different signals, but are there benefits to using one timeframe over another, other than a longer timeframe signal is usually more reliable?

Insights greatly appreciated!


  • markdmarkd ✭✭✭
    It seems the time frame (daily weekly monthly) affects how much time can be shown on an individual chart.

    A chart is about 54 columns wide. Daily data is more detailed (5 times as many OHLC data points as a weekly chart, about 20 time as much as a monthly chart). A stock is likely to fluctuate in the daily time frame so that it will occupy more columns in a month than if it went straight from month's high to low or low to high. So the monthly chart will occupy fewer columns and cover more time. You can see this if you look at the horizontal axis where the years are marked. It's less true for daily vs. weekly charts, but you can see a difference.

    I don't use them enough to know whether one time frame is more useful than another.

  • You can get more columns on the charts by using the "Duration" Fill the Chart (Wide).

    PnF and candlestick charts are two entirely different style charts. Think of them as two different languages, talking about the same data. PnF charts can be used to eliminate "noise" or insignificant price movements. They give unambiguous signals and allow for clearly identifying trends. You can add back some of the noise by using smaller scale box sizes and/or reversal method. Using the shorter time frames will also add back some noise and shorten the time frame. Adding noise does nothing for interpreting the chart.

    As it's an entirely different language you have to learn the nuances and that takes time and effort. I think that it's well worth the effort. I've been using P&F charts for about a decade. The scales and time frames that "work best" are dependent on what YOU are looking for. If you are looking for short term trading opportunities, the short term minute charts might be more useful to you. If you are an intermediate term investor, the daily charts might be better suited for investing decisions. If looking for long term picture, the weekly or monthly data charts might be of interest. Only by deciding what you want to do with them can you decide on what you want to see on them. You may want to view a position you have on the longer term pnf chart to get a big picture view. I can tell you that it is a valuable tool to add to your arsenal. Jeremy DuPlessis writes that a good PnF analyst will look at a chart on 3 different scales to get a clear view into the activity of the chart.

    I look for dynamic CSS patterns on traditional scale daily charts and then shorten my view, using 1 box reversal and the % trend charts, to determine action points. The patterns show up on stocks where supply is clearly in control as evidenced by the CSS (consecutive sell signals). Once a dynamic sign is shown, after the CSS, it's an indication of significant demand entering the picture.
    The intent of the CSS patterns is not to enter a trade but to hold on for as long as the chart is not behaving bearishly.

    I look at a lot of charts, and I often find myself answering "after a dynamic CSS pattern" to the question, "When would be the best time to have bought this stock?"

    Getting back to your question, the options are there for you to determine what is important to you on a pnf chart. PnF charts are more kin to Renko or Kagi or Three Line Break line charts. Time doesn't matter, only price. I find adding the ZigZag indicators to a line chart can also give you the feel for what the pnf chart is doing. This can be a a good translator to assist in your learning pnf. Set the ZigZag parameter to 6 on stocks over $50 and 14 for under $50's. The legs of the zigzag should approximate the column changes on a pnf chart. I find the zigzag lines also help visualize the Wyckoff movements if one is inclined that way.

    As to what is more "reliable", the charts only reflect data. How you develop your system to work with what the charts are saying is where you will determine reliable. In the pnf world, not all buy signals are actually when you should buy and not all sell signals are when you should sell. Paying attention to trends, and relative strength will result in more reliable results.
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