candle opening on other side of cloud top switches the path from support to resistance. This Is not a short signal 100% of the time, but more often than not price will fall or have difficulty returning above after breaking that support path.
Sometimes, price will break through a cloud top path like the chart above, but then climb up the underside of it without breaking through the top. I call this "path fitting" and it makes interpreting signals difficult since the price continues to rise on the underside, cloud acting as resistance. When this happens, the direction price will eventually go depends on other factors, but cloud shape is the largest determiner of how things will play out. On a rising cloud path like the above chart, price rarely breaks out upwards to find support while the path is still rising.
usually, it will path-fit for a time and then break down. Always look to other time-frames for reference.
Thanks! It looks like that path volaton played out perfectly, you can also see where bottom cloud *tried* to give support on aug 1st-2nd. When the price broke out (open candle below) the bottom of the cloud, this was a major bearish signal.
Heffae Clouds called this play 100% spot on in this case, very nice to see the constantly adapting support and resistance paths maintaining accuracy, even when drawing predictive paths 29+ bars in the future.
Heffae Clouds called this play 100% spot on in this case, very nice to see the constantly adapting support and resistance paths maintaining accuracy, even when drawing predictive paths 29+ bars in the future.