Every analysis includes two target prices for the instrument; a conservative target and an ambitious one. These are labeled as our support levels and are represented by the two thick green lines on the chart. If the price reaches one of these lines, the preferred scenario is confirmed.
The commentary on “Supports and Resistances” provides further details on why these levels were selected and the likelihood of them being met. The asterisks indicate the likelihood at a glance with 1 indicating a weak chance, with 3 indicating a high likelihood.
The thin blue line represents our pivot level. The price crossing this threshold indicated that there has been a physiological shift in the market and that our trend has reversed. In this case, our alternative scenario is now in play. Because this pivot level indicates when the preferred scenario has become invalidated, it can be used as a simple stop loss level within your trading to help you manage risk.
Trading Central’s preferred scenario indicates the most likely directional outcome and is illustrated by the blue arrow on the chart.