Precision Swing Points (PSP)

A deep dive into precision swing points (PSPs), another Quarterly Theory concept founded by Trader Daye. By the end you'll know what a PSP is, how to spot and use them, the precision-candle variant, and there's a PSP entry model at the end.

If you want PSPs (and precision candles) marked automatically across triads with filters by true open, SSMT, and more, the QT Toolkit at oracleindicators.com handles all of it.

First — what's a swing point?

A swing point is a three-candle pattern where the middle candle has a wick larger than the candle to its left and right. To keep it clear, number them: candle 1 (left), candle 2 (the swing), candle 3 (right).

What's a PSP?

A PSP is a swing point, but candle 2 — the swing candle — must close differently across closely correlated assets. One asset closes bullish, one closes bearish. The asset on the left forms a bearish candle as that swing point; the asset on the right forms a bullish candle. That's a precision swing point.

The swing must form at the exact same time across the assets. So if you're on the hourly, the 9:00 candle has to be the swing on at least one asset, and the closures across the triad must differ.

It doesn't need to be a swing point on all correlated assets — just at least one. PSPs are almost always there before every market movement, and they can be used for reversals, continuations, and spotting consolidation.

Precision Candle (PSC) — the cousin

Sometimes you'll see the cracking-correlation closure on a candle that isn't a swing point on any of the assets. The closures still differ — bullish on NQ, bearish on ES, same candle, same time — but there's no swing-point formation.

That's called a Precision Candle (PSC). Same logic, same edge, just doesn't have the swing structure to anchor a stop to. PSCs are still tradeable — you'd use the candle low/high as your stop reference instead of the PSP high/low.

The combinations possible on any given candle across the triad:

• Both assets swing + different closures = both have PSPs.
• One asset swings, the other doesn't, different closures = PSP on the swing asset, precision candle on the other.
• Neither swings but closures differ = precision candle on both. Still usable.

This article focuses mainly on PSPs because they yield the higher R:R trades, but the same logic applies to precision candles throughout.

Using PSPs for reversals

PSPs are mainly used to confirm Sequential SMTs. You want a PSP to form either on the candle that creates the SSMT, or a few candles after. Once the SSMT occurs and a PSP forms (one asset bullish, one bearish on that swing), price breaks.

Timing tip: if the candle that creates the SSMT closes as a PSP, perfect — that's the cleanest setup. If it doesn't (which is most of the time — it's only about a 30% chance the SSMT candle itself is a PSP), you can wait a few candles after the SSMT for the PSP to form. But not too long. If it's 5–7 candles after the SSMT or more, be cautious — by that point the move has often already started and the R:R isn't there. You want the PSP close to the SSMT in time.

PSPs inside gaps: a PSP that forms inside a fair value gap is much higher probability and can also help confirm the gap itself will hold. Stack a PSP with a gap and an SSMT and the setup is very high probability.

Which asset to enter on

Here's the filter that took my PSP entries to the next level.

We've got a different closure across the assets — bullish on one, bearish on the other. Which asset do you trade on?

In a bullish setup (expecting price higher), the bearish candle is showing weakness in that asset — sellers exhausted, less likely to run the PSP high. Enter on that asset.

In a bearish setup (expecting price lower), the bullish candle is showing weakness — buyers exhausted, less likely to run the PSP low. Enter on that asset.

Combine that with the failure-swing asset filter: the asset that created the failure swing for the SSMT is already showing weakness (it didn't take the liquidity). If that asset is also the one with the "weak" closure on the PSP, that's the asset to enter on. Stack of confirmations.

The doji edge case

Sometimes candle 2 closes as a doji — closes exactly where it opens, neither bullish nor bearish. Technically you can class it as a PSP if the other asset closed clearly bullish or bearish. Personally, I don't trust dojis as PSPs. I want a clear bullish closure on one asset and a clear bearish closure on the other. If you want to use dojis, you can — just know it's lower probability.

Using PSPs for continuations

Once order flow is set by a Sequential SMT, any PSP that forms in line with the order flow / drawn liquidity can be used as an entry. The wick of a PSP is very reactive — price usually trades into it before trading away. Treat PSPs like order blocks.

In a market maker sell model: the move began from a PSP forming at the top (with a change in the state of delivery after it), indicating price wants lower. Your job is to spot PSPs that form in line with that bearish order flow, wait for price to trade into the PSP wicks, then trade away from them. The markets move from PSP to PSP — they're also very good draws on liquidity.

Using PSPs to spot accumulation

If you see multiple back-to-back PSPs, that's a sign of low-probability conditions. In high-probability conditions, a PSP forms and price moves away from it quickly. If price is in a tight range forming lots of bullish and bearish PSPs, sit out and wait for the market to leave the range. What you want: a bearish PSP forms, price trades into the wick a couple times, then expands lower (and vice versa for bullish). A bearish PSP followed by a bullish one within a few candles = stay out.

How to enter with a PSP

Three entries to choose from:

Candle 3 entry (my personal favourite, higher R:R): enter directly on the open of candle 3 in anticipation that the PSP will hold. You're betting on the cracking correlation. Stop on the PSP high/low. This is the riskier entry — you're entering before candle 3 even closes — but it gives you the best R:R.

Candle 4 entry (safer, lower R:R): wait for candle 3 to close. Now you have the full three-candle PSP formation confirmed. Enter on candle 4's open. Stop still on the PSP high/low. Tradeoff: by candle 4, price may have moved a fair bit away from the PSP, so the entry is worse and the R:R smaller.

First FVG after the PSP: if you miss both, look for the first fair value gap that prints after the PSP. Enter on the retest. This is the most conservative — you get the displacement confirmation plus a PDA defending the PSP.

In all three cases, the safest stop is on the PSP high/low. If the PSP is part of an SSMT setup, the SSMT high/low is the true invalidation but it's usually a wider stop.

The PSP → TOB entry model

I call this the PSP to TOB (True Order Block) entry model. A true order block is the final up-close candle inside a bearish PSP, or the final down-close candle inside a bullish PSP (the "PSP" being that swing-point candle 2 in the three-candle pattern).

Wait for price to close below/above the TOB to validate it. Timeframe alignment to spot your TOB:

• Weekly PSP → daily TOB
• Daily PSP → 4-hour TOB
• 4-hour PSP → 1-hour TOB
• 1-hour PSP → 15-minute TOB
• 15-minute PSP → 5-minute TOB
• 5-minute PSP → 1-minute TOB

Example: a 4-hour PSP forms → scale down one timeframe → find the TOB → price closes below it (validates the TOB) → two candles wick back into the TOB → look for your entry. Enter on the TOB's timeframe with the stop on the PSP high, or scale down one or two timeframes after price tags the TOB and wait for your classic entry model (FVG, IFVG, order block) to displace out. Safest stop: the PSP high.

Key Takeaways

• A PSP is a swing point where candle 2 closes differently across correlated assets (one bullish, one bearish). Only needs to be a swing on one asset.
• Precision Candle (PSC) = same different-closure logic but no swing-point structure. Still tradeable, no swing stop reference.
• PSPs precede almost every market move; use them for reversals, continuations, and spotting accumulation.
• Reversals: a PSP confirms a Sequential SMT (on the SSMT candle or a few after — not 5–7+ candles later).
• Enter on the asset with the weak closure (bearish in a bullish setup, bullish in a bearish setup). Stack with the failure-swing asset for the cleanest entry.
• Dojis as PSPs are lower probability — wait for clear closures both sides.
• PSPs inside fair value gaps are much higher probability.
• Continuations: in established order flow, treat PSP wicks like order blocks — price trades into them, then away. Markets move PSP to PSP.
• Accumulation: back-to-back bullish + bearish PSPs in a range = low probability, sit out.
• Three entries: candle 3 (higher R:R, riskier), candle 4 (safer, smaller R:R), or the first FVG after. Stop on the PSP high/low or the SSMT high/low.
• The PSP → TOB model uses timeframe alignment to take a tighter entry inside the PSP candle's structure.