| Reversal Amount |
A term that refers to the amount of price movement required to shift a chart to the right. This condition is used on charts that only take into consideration price movement compared to charts that take into consideration price and time.
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In the context of Point & Figure charts, the reversal amount is the number of boxes (an X or an O) required to cause a reversal. A reversal would be represented by moving the next column and changing direction. If you increase the reversal amount, you will remove columns corresponding to less significant trends and make it easier to detect long term trends. In terms of Kagi charts, it is the amount (genearlly around 4%) needed to change the direction of the vertical lines.
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Point and Figure Charting - Take a look at how to construct and read these simple charts designed for longer-term positions. |
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