I know the Path Predictor charts can initially be confusing. Given they have been such strong content since they launched in June 2023, I figured it would be a good idea to breakdown how to read the charts. A typical Path Predictor chart contains, beyond the candles for the security being analyzed, the following features…
Moving Averages: The red and black lines in the chart below are moving averages. I typically will use the 50 day and 200 day simple moving averages in my charts as these are the most popular among traders. Due to the number of traders who watch these levels, the 50 and 200 SMA’s will tend to provide support (when price is above) and resistance (when price is below).
So, if price is above a moving average, the moving average can often be a place of price support. I tend to exit short positions on a touch of a moving average (when price is above and moving down)…and/or I might look to enter a long position on a touch of the moving average…and play a bounce off that support level.
Conversely, when price is below a moving average, the moving average can become resistance. As such, I will often look to close a long position on a touch of a moving average (when price is below and moving up)…and/or I might look to play a sell-off and go short on a touch of a moving average…expecting the average to be a place of exhaustion/resistance for the move up.
Pivot Points: These are the blue horizontal lines on the chart. The pivot points are prices calculated by a program I designed years ago. They use volume and price action to calculate key price levels that may not be as obvious as moving averages. Just like moving averages, these lines can be used in the exact same way to decide on entries and exits on positions. When price is moving up to a pivot, the pivot will be looked at as resistance. When price is moving down to a pivot, the pivot will be looked at as support.
Pivot Boxes: These are very similar to pivot levels, except these provide a little more leeway…and tend to be a lot stronger due to the multiple levels of support that are typically within the box. Sometimes it is easy to calculate clear pivot points (blue lines)…sometimes not. Pivot boxes (blue bordered box with yellow inside) provide zones of heavy price confluence. So, just like pivot points and moving averages, traders may look to these levels as either support or resistance depending on what direction they are hit by price. It’s just that pivot boxes don’t provide a clear price, but more of a zone.
The Path Predictor Pattern: These are the orange lines you see on some charts. Based on dozens of variables, one of the features of the program created for trading will calculate the expected path and price targets a financial instrument to might achieve…along with an approximate date target to go with that price target. All the data provided by Path Predictor can then be used to draw the price pattern into a charting service like Symbolik (Symbolik.com).
Path Predictor, when a directional calculation is made, will carry calculated probabilities of a pattern playing out. A good probability is 65% or above for a trend calculation. Anything below a 65% calculated probability for a pattern is still worth noting. The lower you are in terms of calculated probability is simply a way for the program to say that it is the less confident in the data and assessment…likely because of conflicting technicals or other calculations. The chart below had a 66% probability for the first orange line playing out, a 22% chance of a sideways move, and a 12% chance of a move up. Sounds complicated, but when you see it in action along with the commentary on the position, it’s pretty straight-forward.
Moving further with the Path Predictor calculation, you will then see that first orange line meet an intersection between two other orange segments. At this point price will be expected to either bounce or crash, and as we approach that level where the fork in the road appears, Path Predictor will provide calculated probabilities on the route (up or down)…which is then shared with FMA subscribers.
How can you use Path Predictor for trading? First, any trades should be discussed with a licensed financial advisor (see disclaimer below). Second, the possibilities are really endless as to how you could trade and why Path Predictor provides a wealth of information in its lines. For example…
If a trader decides to follow Path Predictor because they like the pattern (orange lines), and it fits with their analysis, then the trader would likely short Bitcoin here.
However, the initial concern would then be whether the price pivot at $28,161 would provide support. So, maybe you wait for a break of that price pivot before getting into the short BTC trade, and then use a close above the price pivot to exit (stop loss) the short trade.
Let’s assume a trader did short Bitcoin here, the likely exit target would be the pivot box around $26,250 since that would provide resistance.
It is possible to go through dozens of different ideas, using the chart to develop both short-term and long-term trade ideas. The goal of the charts is basically to decipher support and resistance levels through pivots and moving averages to guide entry and exits.
Advanced traders would use these charts and combine their own analysis for even tighter or filtered entry and exists on trades.
CLICK THIS LINK FOR A LARGER VIEW OF THE CHART BELOW: https://sblk.io/s/lMMzuQUAFLtnQuOv
FINANCIAL CONTENT DISCLAIMER –
The Sharp Plays, @TheSharpPlays on Twitter, TheSharpPlays.com, and this Web Site (collectively referred to hereafter as “TSP”), is published as an information service and it includes opinions as to buying, selling and holding various stocks, investments, and other securities. However, the publishers of TSP are not brokers or investment advisers, and they do not provide investment advice or recommendations directed to any particular subscriber or in the view of the particular circumstances of any particular person. The information provided by TSP is obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Visitors to TSP or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so.
At various times, the publishers and employees of TSP may own, buy or sell the securities discussed for purposes of investment or trading. TSP and its publishers, owners and agents, are not liable for any losses or damages, monetary or otherwise, that result from the content of TSP. Securities discussed by TSP should be considered speculative and contain a high degree of volatility and risk.
Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Futures traders must review a copy of the Risk Disclosure Statement for Futures Contracts. Investors need a broker to trade securities & options and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations made by TSP. Due to the time critical nature of stock, options, future, or other trading, brokerage fees, and the activity of other subscribers, TSP cannot guarantee that subscribers will mirror the performance stated on our track records or promotions. Performance numbers shown are based on trades subscribers could enter based on our guidelines.
The results posted for TSP are hypothetical. Results are based on the price when the position was published by TSP, and the price when dropped by TSP. TSP cannot guarantee that any person bought or sold the actual security for the prices listed on the Web Site. Investors may receive greater or lesser returns based on their trading experience and market price fluctuations. The prices listed are for reference only and are in no way intended to represent an actual trade, entry price or exit price.
The information contained on TSP is provided for general informational purposes, as a convenience to the visitors & subscribers of TSP. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. TSP is not engaged in rendering any legal or professional services by placing these general informational materials on TSP. TSP and its publishers specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of TSP, even if TSP has been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.
TSP makes no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that TSP endorses, sponsors, promotes or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated. TSP is the copyright owner of all text and graphics contained on this website, except as otherwise indicated. Other parties’ trademarks and service marks that may be referred to herein are the property of their respective owners. You may print a copy of the information contained herein for your personal use only, but you may not reproduce or distribute the text or graphics to others or substantially copy the information on your own server, or link to this website, without prior written permission of TSP. Permission to use and reproduce documents and related graphics available from this website is granted, provided that: (1) the below copyright notice appears in all copies and that both the copyright and this permission notice appear; (2) use and reproduction of documents and related graphics available from this website is limited to personal, non-commercial use; (3) no documents or related graphics, including logos, available from this website are modified in any way; and (4) no graphics, including logos, available from this website are used separate from accompanying text. Use or reproduction for any other purpose is expressly prohibited by law and may result in civil and criminal penalties. Violators will be prosecuted to the maximum extent possible.
OTHER THAN AS SET FORTH ABOVE, ANY REDISTRIBUTION of TSP reporting, TSP website content, or the information contained therein, without the written consent of the publishers of TSP, is STRICTLY PROHIBITED. Copying and/or electronic transmission of TSP content or TSP Web Site content is a violation of copyright law.