Get major S&P trading levels through Pitchfan!Hey everyone, how are you all?
Let’s discuss Pitchfan and Fibonacci Channel on S&P 500. There are some bearish news in the market. The news includes Federal Reserve’s stance on increasing the interest rates, making investors shifting into the bond markets. Netflix down by 22%. Your trades should always respect the fundamental analysis. Don’t try to go against it.
Market Condition:
S&P Index has been in a massive uptrend, giving around 120% returns from its previous low on 20 March 2020. It has been in uptrend since March 2020, having few corrections. But, with Pitchfan, we can catch all these corrections with high accuracy.
Pitchfan
Pitchfan is a mixture of Fibonacci Fan and Pitchfork. It uses both of their levels and has some features of Gann Fan too. The red coloured line is the median line which is the main support and resistance line. The other lines have importance according to Fibonacci’s rules. Main lines are 0.382, 0.5, 0.618. We have kept 0.25 because it is the median of the red line and the 0.5 level of Fibonacci. You can use my levels through the picture in the chart.
How to draw a pitchfan?
Pitchfan is drawn at the starting of a trend. Here, the market was consolidating before entering into the uptrend. A is the the first low of the trend, B is the next high and C is the next low. It can be drawn on the higher timeframes. Refer to the image below.
How to trade these levels?
These lines are the major points where the trend reverses on the lower timeframes. We can use these levels to trade. You need to check two things to get the direction of the trade:
The current trend matches on both the higher timeframes and the lower timeframes.
The news is in the same direction as your trade.
After this, you have to get the best entry. For this, you need to get these three confirmations:
Candlestick Pattern
Fibonacci Retracement or any Chart Pattern
RSI or any other Oscillator
Check out the below chart image to get the perfect entry:
Observations:
Price will touch these lines in 70% of the cases. Price might not touch these lines in 30% of the cases due to sentiments or any other driving factor.
When price passes by any major level, it will always take a pullback on the lower timeframes. You may trail your stop loss or enter into the trade by checking out the pullback.
Targets?
Target can be the next line coming in the direction of the trade. Always have RR of 3 or more. You can always trail the stop loss after checking out for the pullback on the lower timeframes.
Always check the news before carrying your positions overnight.
S&P might bounce back from the yellow level, from the blue demand zone. If it breaks it, our target will be the red median line.
Fibonacci Channel:
Fibonacci channels gives the major turning levels too. Here, you can see the price is bouncing back from the 0.5 to 0.618 levels, and it has happened multiple times. You can take confirmations on the lower timeframes and take the trades accordingly. Do let me know if you want to learn how to make it.
