Sometime is very important to generate probable scenarios for upcoming process options. Exact answer to question: "why is it so important?", we will get later. Now let's consider how easy and natural we can generate all possible uninterrupted scenarios using basics of PFT and Price Flow analysis (PFA) technique. In general case "space options" for price flow has place between "to continue" or "to u-turn". "To u-turn" later and now - is (topologically) the same scenario. Obviously any channel will be u-turned somewhen. So all scenarios in PFA are (topologically) the same and difference is only in Quality of the channel and the influence to upper scales. Please take a close look at the attached charts and try to imagine that almost all possible options are limited by marked lines. Important that "continue" at one scale may be "u-turn" at the another. more charts here: http://sganalysis.com/2012/04/25/price-flow-theory-pft-and-the-space-of-the-scenarios/
S&P-500: the continuation of moving up increases theoretical probability of pullback but it does not mean that pullback will be more powerful; may even opposite: less powerful OIL: at last it happened: the flow at the scale 2 turned up and confirmed the basic "Increase of Amplitude" for now to hold this flow stable will be very difficult and it must cause a destabilization of the Main Flow UP at scale 4
S&P-500 - oscillations with Amplitude increase: follow or stay aside GOLD: clear oscillation at scales 2 & 4 and nice configuration at scale 1
Actually there is no "space", actually in the most cases there are 2 most probable scenarios and their less probable variations. This must be already obviously for attentive readers. The more you take into consideration the PFT the clearer will be the picture of changes in price and so it will be easier.