4.2 The X Axis

Once you can draw a line, a bar, and a candle, the next construction question is what each glyph stands for on the horizontal axis. CMT Level I treats that as the x-axis unit: fractal structure, data interval, the variables on a conventional chart, volume as an alternative to time, point-and-figure construction, box size and reversal, and range bars.

This OpenExamPrep section is independent teaching for those Level I construction topics. Named point-and-figure patterns, 45-degree P&F trendlines, and vertical/horizontal counts belong in the later P&F unit. Here the job is to know how the plot is built and what the x-axis is measuring.

Conventional axes

On a conventional price chart:

• The x-axis (horizontal) is time, running left = older to right = newer.
• The y-axis (vertical) is price, running up = higher (the next section covers arithmetic versus logarithmic scaling of that axis).

Each plotted glyph occupies one horizontal slot that corresponds to one interval of the clock: a 5-minute candle, a daily bar, a weekly candle. Volume usually appears in a separate pane, not as the x-axis of the price plot. That default — time versus price — is the picture most Level I stems mean by a conventional chart.

Fractal construction

Fractal, in this unit, means that the same structural grammar appears at more than one scale. A 15-minute candle is built from that quarter-hour's open, high, low, and close in the same way a daily candle is built from the session's OHLC and a weekly candle is built from the week's OHLC. Congestion, swings, and trend legs rhyme across intervals even though the clock is different.

Fractal construction has two exam consequences:

1. Changing the interval does not invent a new chart type. A weekly bar is not a different species from a daily bar. It is the same bar rules on a coarser interval.
2. A conclusion is interval-specific. A breakout on a 5-minute chart is not automatically a breakout on the weekly chart. The glyphs are analogous; the data interval is not.

If you can build one interval, you can build the others. What you cannot do is treat every interval as the same decision.

Data interval

A data interval is the span of time or activity represented by one plotted element. Common clock intervals:

• Intraday: 1-minute, 5-minute, 15-minute, 60-minute.
• Session: daily (the default in many textbooks).
• Higher: weekly, monthly, sometimes quarterly.

Interval choice is a resolution choice. A smaller interval prints more glyphs over the same calendar span and typically shows smaller typical ranges per glyph. A larger interval compresses more trading into each glyph and typically shows larger ranges.

Construction details that hide inside "daily":

• Session definition: U.S. cash equities often mean the regular session; some platforms include extended hours in the daily bar. Futures may use an exchange session or a 24-hour bar.
• Weekly and monthly: the open is the first print of the period, the close is the last (or settlement), and high/low are the extremes of all sessions inside the period.
• Futures continuity: a "daily" series may be a single contract or a rolled continuous series. The interval is still a day; the identity of the contract is a data issue, not a new x-axis type.

Activity intervals replace the clock: N ticks (trades) per bar, or N contracts/shares of volume per bar. Those still have an x-axis, but the axis is event count, not minutes.

Volume as an alternative to time on the x-axis

Calendar time treats every session as the same width even if Monday traded ten times Tuesday's volume. Volume as an alternative to time means the horizontal organizer is participation, not the clock. Two constructions appear in this unit:

Constant-volume (or volume) bars. A new OHLC bar closes only after a chosen number of shares or contracts have traded. In a busy opening auction you may print several volume bars in twenty minutes. In a dead lunch hour, one volume bar may take much longer. Clock time becomes the variable; volume per bar is the constant.

EquiVolume (associated with Richard W. Arms, Jr.). Each interval still has a date, but the box is a rectangle: height = high − low, width ∝ that interval's volume (often normalized to the lookback so widths are comparable). Heavy-volume days occupy more x-axis space; quiet days are thin. The date axis is no longer uniform. The price plot itself carries volume instead of (or in addition to) a lower histogram.

Neither method deletes price. Both change what equal horizontal distance means. On a conventional chart, one centimeter to the right is one day. On a volume-organized chart, one centimeter to the right is a unit of activity.

Point-and-figure, discussed next, is more radical: classic P&F omits volume and does not space columns by time at all.

Point-and-figure construction overview

A point-and-figure (P&F) chart does not plot one glyph per clock interval. It plots columns of X and columns of O:

• X marks a rising column (prices filling boxes to the upside).
• O marks a falling column (prices filling boxes to the downside).

Time is not the x-axis. Columns sit next to each other because a reversal occurred, not because a day ended. A quiet month may add no new column. A violent week may add several. Many P&F charts still annotate time — often a month letter inside the box where the month changed — but that letter is a label, not spacing.

Classic P&F also does not require volume to print a box. The plot is a filtered map of price travel.

High-level construction (high-low method, the usual textbook sketch):

1. Choose box size and reversal (next subsection).
2. While in an X column, use the period's high to try to add Xs. If you cannot add an X, use the low to test whether a reversal to Os is allowed.
3. While in an O column, use the low to try to add Os. If you cannot, use the high to test a reversal to Xs.
4. Xs and Os do not occupy the same column. A reversal starts a new column immediately to the right, moving the opposite direction.

Some platforms use closes only instead of high-low. The exam idea is the same: P&F is box-and-reversal construction, not a daily OHLC bar shifted sideways.

Box size and reversal

Box size is the price increment represented by one X or one O. Examples: 1 point, 0.50, $1.00, or a percentage of price (percentage / logarithmic boxes). Smaller boxes make the chart more sensitive (more boxes, more columns). Larger boxes filter noise and print fewer reversals.

Reversal (reversal amount) is how many boxes against the current column are required to start a new column in the opposite direction. The most common textbook setting is a 3-box reversal. Reversal distance = box size × reversal amount.

Worked numbers: box size $1, reversal 3. Reversal distance = $3.

• In an X column whose highest filled box is 54, price must fall far enough to fill three O boxes before a new O column starts — a $3 decline through the box grid, not a $1 dip.
• In an O column whose lowest filled box is 40, price must rally $3 through the grid before a new X column starts.

A 1-box reversal starts a new column as soon as price fills one box the other way: more columns, more detail, more noise. A 5-box reversal demands a larger contrary move: fewer columns, slower turns.

Changing box size and changing reversal both change sensitivity, but they are not the same knob. Box size is the grid. Reversal is the permission to switch columns. The later P&F unit develops patterns on that grid; this unit only requires that you can define the two parameters and describe how columns form.

Range bars

Range bars (range charts) fix the high-low distance of each completed bar, not the clock.

Construction:

1. Choose a range size (10 ticks, 2 points, $0.50 — whatever matches the instrument).
2. A bar opens and then extends as price moves.
3. When high − low of that bar reaches the chosen range, the bar completes.
4. The next bar typically opens at the prior close, which sits at the high or the low of the completed bar (the extreme that finished the range).
5. Repeat. Elapsed time is not an input.

Worked sketch: 10-point range bars, price starts at 100 and trends up without a 10-point pullback. The first bar runs 100 to 110 and completes. The next opens at 110 and runs to 120, and so on. If price then chops 3 points for two hours, no new bar prints until price finally travels 10 points. In a fast opening, many range bars can print in ten minutes.

Properties to remember:

• Every completed range bar has the same high-low range (the setting). An in-progress bar may be shorter until it fills.
• Time per bar is variable. That is the point: the x-axis still looks like a sequence of bars, but equal horizontal slots are equal price travel, not equal minutes.
• Range bars are not point-and-figure. P&F uses a box grid and a reversal count and plots X/O columns. Range bars remain OHLC-style bars (or candles) with a fixed range completion rule.
• Range bars are also not Renko in the usual teaching: Renko is typically a brick of fixed size that prints on close-to-close (or high/low) steps; range bars keep an open-high-low-close identity inside each fixed-height bar.

Putting the x-axis choices together

Start from the conventional chart: time on X, price on Y, fractal OHLC grammar, a named data interval. Ask whether the clock is the right horizontal unit. If participation matters more than minutes, consider volume bars or EquiVolume. If you want to ignore quiet time and plot only filtered price travel, P&F's box size and reversal are the construction tools. If you want OHLC bars whose height is constant, use range bars.

The y-axis — whether those prices are spaced in dollars or in percent — is the next section. Independent CMT Level I practice by OpenExamPrep is at /practice/cmt.