What are PricePoints
'PricePoints' are levels that will help you take decisions about likely price movements.
Technically, they are a variation of Support and Resistance Levels and are calculated in similar
ways, except that past data is extensively used in the calculation process.
In practice, you should draw horizontal lines on your chart at the beginning of the day as per
these Price Points and observe price movements across these lines as the day progresses.
Given below is an example from a 'Suggest' given on 18-Sept-09. The Price Points, Chart, and
other details shown are correct for the given date. Horizontal lines have been drawn on the
Yahoo! Chart in light blue colour as per PricePoints.
How to use PricePoints
When prices move through any known level (PP1, PP2, PP3, PP4) on increased volume,
they are most likely to continue the current trend...
If prices hit the known level but are unable to move through, then they are
most likely to reverse the current trend.
In the example given above, the stock opened above PP3(244) and quickly crossed
PP4(246) and PP5(249). This indicates there is momentum in this stock and prices are
likely to increase.
This is not always correct. In this case, the price kept fluctuating between PP5(249)
and PP6(252) for most part of the day. These two PricePoints acted as Support and
Resistance levels. This area is with yellow background in the chart above.
However, later in the day, there was a breakout from PP6(252) where even PP7(255) was
First point of interest is when PP4(246) is crossed. As per our guidelines, you will
wait till the next stage PP5(249) is crossed before you place a BUY order. You
will also study volume patterns and other chart-indicators before you decide to
enter into the trade.
In this case,
your BUY order would have been at 250. STOPLOSS would be 248 because 249 can act as a
Resistance level, which it does. EXITs would be at PP6(252-EXIT) and PP7(255-EXIT+1).
Here your purchase should have been at 250 and sale at 258(EXIT+2).
The terms used above have been defined and explained in the file "Our Guidelines". Please
go through the explainations for BUY, STOPLOSS, EXIT, EXIT+1, EXIT+2, etc.
The effectiveness of PricePoints depends on your ability to use the system in conjunction
with other forms of technical analysis. These other Technical Indicators can be anything
from MACD crossovers to candlestick patterns — the greater the number of positive
indications, the greater the chances for success.
We would like to say this again: PricePoints alone cannot be a
change. It is only an indicator, and you should look for confirmatory signals from other
Technical Analysis indicators like CandleStick formations, MACD cross divergence, Stochastic
Divergence, MA Crossover, ADX, MFI, RSI, Woody's CCI, Bollinger Band squeeze, etc. Only if
two or more indicators point to the same direction can you accept that as prediction for
change — the greater the number of positive indications, the greater the chances for
success... Even then, please use your judgement and use ALL of these only as guidelines.