The Path Predictor charts may seem complex at first, but given their strong performance since launching in June 2023, I wanted to break down how to read and use them effectively.
A typical Path Predictor chart includes several key elements beyond just the price candles of the security being analyzed:
1. Moving Averages (Red & Black Lines)
- The chart typically includes 50-day and 200-day simple moving averages (SMA), as these are widely followed by traders.
- Moving averages serve as support when price is above and resistance when price is below.
How to Use Moving Averages for Trading
- If price is above a moving average, it can act as support.
- Example: If price declines toward the moving average, a trader may exit short positions or enter long positions, anticipating a bounce.
- If price is below a moving average, it can act as resistance.
- Example: If price rises toward the moving average, a trader may exit long positions or enter short positions, expecting resistance and a potential reversal.
2. Pivot Points (Blue Horizontal Lines)
- These levels are calculated using a proprietary program that factors in price action and volume.
- Like moving averages, pivot points act as support when price is falling and resistance when price is rising.
3. Pivot Boxes (Blue Bordered Box with Yellow Inside)
- Pivot Boxes function similarly to pivot points but provide a broader range of price confluence rather than a single level.
- They often represent stronger support or resistance zones due to multiple levels of influence.
- Traders may look to enter or exit positions depending on how price interacts with these boxes.
4. Path Predictor Pattern (Orange Lines)
- The orange lines represent the calculated expected path of a financial instrument, including:
- Price targets
- Expected timeframes for movement
- These patterns are generated based on dozens of technical and statistical variables within the proprietary system.
Understanding Probability in Path Predictor
Each Path Predictor pattern includes calculated probabilities for different outcomes.
For example, in the chart below:
- 66% probability of the first orange path playing out
- 22% probability of a sideways move
- 12% probability of an upward move
A probability below 65% does not mean the pattern is invalid—just that the system has lower confidence due to conflicting technical signals.
As price moves forward, Path Predictor will update probabilities at critical decision points (e.g., intersections of orange lines), which are shared with FMA subscribers.
How to Use Path Predictor for Trading
⚠ Always consult a licensed financial advisor before making any trades.
There are countless ways traders can utilize Path Predictor in their analysis. Here’s an example:
Example: Shorting Bitcoin Using Path Predictor
- A trader sees a bearish pattern on Path Predictor and considers shorting Bitcoin.
- The key concern is whether the price pivot at $28,161 will act as support.
- The trader may wait for a break below $28,161 before entering the short position.
- A close above $28,161 could be used as a stop loss.
- If the trade is entered, the likely exit target is the pivot box at $26,250, which is expected to provide support.
Final Thoughts
The Path Predictor charts help traders identify support and resistance levels through a combination of:
✔ Pivot Points
✔ Pivot Boxes
✔ Moving Averages
✔ Path Predictor Patterns
Advanced traders can use these charts to develop both short-term and long-term trade ideas, refining their strategies based on technical confluence and probability-driven insights.
Would love to hear how you’re using Path Predictor in your own trading strategies!
CLICK THIS LINK FOR A LARGER VIEW OF THE CHART BELOW: https://sblk.io/s/lMMzuQUAFLtnQuOv
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