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During consolidation periods, the price fluctuates in a trading range and determining the support and/or resistance levels within the range is very difficult. By focusing on Modal Points, the significant part of the trading range can be narrowed and breakouts to either the upside or downside can be more easily determined.
A cluster of Modal Points trading in a narrow range is called a Modal Platform. In the above example, two Modal Platforms are apparent. The advantage of a Modal Platform is that breakouts can be spotted earlier than with traditional charting analysis. Usually, once the Modal Point or Active Range, to be more conservative, is broken, a new trend will emerge. In the above example, the first Modal Platform showed that once the support (using Active Range) was broken, the price quickly sold-off. Conversely, the second Modal Platform showed that once the Modal Point closed above the resistance range (top of the highest Active Range), the price reversed and rallied strongly.
A Modal Platform can also be formed by two or more significant Modal Points with roughly the same price. Significant Modal Points are usually situated at, or near, tops or bottoms.
In the above example, all of the significant Modal Points occurred at, or near, the lows after steep sell-offs. The first three Modal Points that formed the platform were spread out quite evenly (i.e. two months). But the final time the price retraced back to the support platform, it was only a couple of weeks after the third Modal Point. This indicated a lack of buying momentum and once the price broke through the Modal Platform, the bearishness had been confirmed and a new down-trend was in place.
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