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reversal amount

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Financial Dictionary

Reversal Amount

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 instead of both price and time.

Investopedia Commentary

In the context of point and figure (P&F) 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 a movement to the next column and a change of 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 (generally around 4%) needed to change the direction of the vertical lines.

Related Links

Point and Figure Charting
Introduction To Technical Analysis

See also: Box Size, Kagi Chart, Kagi Chart, Point And Figure (P&F) Chart, Reversal, Reversal

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