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ProSticks - Learning Curve
Hong Kong Economic Time --- June 23, 2000
Techniques of Modal Point Selection One
Many readers thus far must be wondering how can one tell which Modal Points are important and which ones
are not. Every ProSticks bar has a Modal Point. How can one know in advance which Modal
Point is of significance?
Though we encourage you to analyze and create your own ProSticks theories, we will offer you some general
insights into our many years of findings. Our extensive research suggests that Modal Points of long range bars are important. A
long range bar is one in which (1) has a very price trading range, and (2) the Active Range
(or body) occupies most of the bar.
Refer to the ProSticks chart below of British Pound.
Notice that bar A is a long range bar since it has a very wide price range with
the body occupying most of the entire bar. As can be seen, the Modal Point of A
posed as a strong resistance to the price movements at B.
Why are Modal Points of long range bars important? Refer again to the chart.
Since A is a long range bar, the market was very volatile during that
day. The fact that the bar was a down day signals that severe selling pressure had
dominated the market throughout the day, especially at the Modal Point. As such,
when the price subsequently rose to similar price levels at B, the selling
pressure at the Modal Point of A resurfaced which caused the market to
fall. To make things worse, when the price rose to B, the weak hands that
had longed the market at the Modal Point of A now recouped nearly all of
their floating losses and thus, were anxious to sell and exit the market at
breakeven, exacerbating the downfall.
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