A boundary, not a forecast
Invalidation answers one practical question: what observable market condition would make this setup no longer coherent? It does not predict that price will reach the boundary. It simply tells us where the original logic ends.
A disciplined process decides what “wrong” means before the market answers.
Without a boundary, an explanation can be changed after every price move. With a boundary, the same rule can be reviewed honestly across many setups.
How the model finds the line
A chart can offer several useful references: an important moving average, a previous turning point, a volume area or a volatility level. The model applies the same hierarchy each time and chooses the nearest valid reference on the correct side of price.
This consistency matters. Moving the boundary selectively after seeing the market move would make the apparent risk look better than it really was.
Risk/reward comes afterwards
The model first finds a valid boundary and a reasonable first objective. Only then does it compare the two distances:
- risk: the distance from the current reference price to invalidation;
- potential reward: the distance to the first valid objective;
- risk/reward: how those two distances compare.
The ratio describes the shape of the opportunity. It does not tell us the probability that either level will be reached.
Why this is useful
A high score without a sensible boundary is incomplete. Keeping the boundary beside the rank helps the user see both sides of the idea: why it is interesting and what would make it stop being interesting.