PnF Charts

isabelds

Hello,

for those who use PnF charts, is it better to use the closing price or high/low prices for the chart type? Does it make a significant difference?

TIA,

Isabel

lmkwin

The objective of any charting is to find the display that speaks to you and that you understand. It is better to use both. Jeremy DuPlessis wrote that a good analysis should be conducted using at least 3 scales. What those are is up to you. Looking at both High/Low and Close Only will give you a clear picture as to how the price is moving. Close Only eliminates the swings, or noise, from the chart. There will usually be less columns for a set period vs a High/Low for the same period. High/Low shows where volatility is pushing, one way or another. Your Reversal size also can assist also.

A 3 box reversal has a strong continuation bias. A 2 box has a continuation bias. A 1 box is neutral. These are the most common reversal sizes. But a 4 or 5 box also can help at times. Smaller reversal size = more column changes. Larger = longer columns but less of them.

I personally rely on the Traditional scale 3 box for the patterns I use. I have written about the Dynamic CSS Pattern several times on this forum. I also keep a public chartlist with recent patterns.

When looking to buy or sell, I will ALWAYS consult the % Trend chart. I used to say the 3% x 2 High/ Low and Close Only are a great final arbiter of action points but I have noticed that a 10% x 1 or a 5% x 2 High/Low will rarely lie to you.

I also highly recommend adding 1, 7, 9 and a 20-30 moving average lines but you didn't ask about those.

"Does it make a significant difference?"
It may. A chart is for your analysis. Depending on the character of the stock price activity it can change the look significantly, or not much. On slow moving low volatilty stocks you probably won't notice a difference.

It all comes back to getting the chart to tell you the story. Some people read meaning into a candlestick. Some can't. Some love 1 box reversal charts. Some don't. Charts just visually display data. Getting the chart to something that you can read and understand is why there are different settings. Through trial and study, you will find the chartstyles that speak to you.

Close Only Traditional 3 box reversal highlighting 2020 period


Same chart High/Low a lot more columns