Time on a P&F chart explained
Point and Figure time is not constant. Months or years can pass with no box movement at all. Strictly speaking, there is no Point and Figure time axis. However, time may still be marked on to the chart to aid analysis, and enhance forecasting capability. Therefore, years may be casually noted along the X axis.
Understanding a price correction down to a previous bear market low is of great value to the chart reader. For instance, the market nadir of March 2009 on the Dow Industrials could provide clues to future bottoms. Therefore, on the chart below of the Dow, note the marking of the month and year. Point and Figure dates marked in this way are of great use to the technical analyst. Chart readers use past behaviour to forecast future direction.
The Point and Figure X Axis
With no Point and Figure time axis, a workaround method is used. Point and Figure dates may be marked according to a simple set of guidelines.
Point and Figure time - Month changes
When a change in the month occurs, wait for the next box fill via box movement. Instead of entering an X or O, a number is entered. The number is simply the position in the calendar year. For example, number "1" denotes January, number "2" is February, all the way through to "12" for December.
Point and Figure time - Year changes
Should the year change, the change is marked along the Point and Figure X axis. The X axis is marked with the year's number directly below the current column of either Xs or Os.
Following the above rules ensures the passage of Point and Figure time is marked correctly on the chart. Thereby, fortifying chart analysis.