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Breakout

All About The Trendline.Hi, Trendlines: if you do not have any rules to draw the trendline (TL) then this is the most subjective technical analysis criterion of all. Without any rules, you can draw it basically as you want to see it. It is a perfect criterion to talk yourself into the trade or to talk to stay in the bad trade, always there is a new "support" coming. If you do not have any rules to draw it then basically all the time you can find some dots to connect which can seems "perfect" for you. In this post, I'll talk about buying opportunities from the trendline analyzing crypto and stocks. Some rules to draw it and some typical mistakes you should avoid. Let's start from the basics. Obviously, you know that to draw a trendline we have to connect two points and waiting for the third one to reject from it. Easy yes!? NB: For me, the third and the fourth touch are the most reliable touches to wait for. The strongest trendline comes from the points which are easily recognizable - a blink of an eye. If you start looking deeply from where to draw a trendline then keep in mind that it is not the strongest! One second and you will know from where I should draw it! There are some "experts" who say: you cannot draw a trendline without three touching points. Phh...as you see on the image above, I can, and as said if I have a correct lineup the third touching point is the strongest. The second myth for me: the more touches you have on the trendline the stronger it is. Yes, the trend is probably stronger, but for me, every next touch increases the odds for a break/trend change. Sure, I have done great trades from fifth or form the seventh touch but in general, the criteria crossing area has to be quite strong and it has to consists of many strong criteria to do that. Why I don't like to trade for example fifth or sixth touch? Firstly, the trend is your friend until its end. The market moves up and down, as said the more touching points you have, the odds will go higher for the trend change. Think like that, basically TL works as a support and the support is hmm...like the 5cm ice on the lake. You cannot break it with one hit, you cannot break it with second or third (ok If you are strong then you can :P). Fourth, fifth it starts to crack, and the sixth...booom...you are in the water. I don't know was it a good parallel but for me, it works the best - the more touches you have the lower chance for sustainable further growth it is. RULE nr. 1 It is true, that you can draw it in many many ways but let's talk about the first rule. If there aren't any anomalies then the trendline should be drawn "always" from wick to wick (image above) or from body to body. "Always" because there are some cases from where you should draw a bit wider trendline but in general it should be like the prementioned rule. If you start from the wick and the second point is from the body then this is a mistake. The mistake can lead you into quite an ugly trade/investment. If you trade breakouts then it will be misleading for you, if you trade rejections from TL then it will put you in a thought situation - do I should close it if it falls lower or whatever, simply don't do it. If you don't have any significant large wicks then go from wicks. Usually, it will give you the most precise price zones from where to grab something. If you can draw the trendline but one touching point consists of large/huge wick (selling panic or whatever it was) but on other hand, it is quite a normal price action then use candle bodies to draw the trendline. This panic-wick can mislead you. Drawing from the bodies just widening the buying area a bit but still, it gives you a good zone to keep an eye on. If there are a lot of wicks, then there is also a good way to go with a line chart instead candlestick. Candlestick chart Line chart As you see the line chart removes the market noise and you can simply see the closing prices. I use it quite a lot because some altcoins or stocks are quite jumpy and to remove the noise I use a line chart to determine the strongest areas. Stora Enso Idea Let's jump into rule number two. If we will wait for that third touch then there are quite a lot of small rules to keep an eye on. We want to be perfect so let's find a perfect trendline. RULE nr. 2 It increases the odds of rejection from TL if the price has made a new higher high (HH) after the previous rejection. As you see, after the third touch of the trendline, the price has made a new HH and the fourth worked perfectly. - two touching points, we can draw the trendline, waiting for the third touch and if it comes the market has made a new HH after the second touch and we are ready to take it. Summary: After the price prints the second point from where to draw the trendline we have to see a new higher highs formation after every touch. This is a great sign that the trend is strong and if everything lines up perfectly we can step in. RULE nr. 3 It increases the odds of rejection from TL if the touching point timings/length are pretty much equal. After the price has printed a new higher high and coming back down to make the third one it is great to see symmetric between touching points. At the moment, we have a great symmetric and trendline as a criterion is in place! This simple rule shows you that the market is healthy, moves on decent cycles as it should be, no pumps, no dumps just a simple and clean one. The second example: As you see gaps are quite similar and the 4th touch worked almost perfectly. Waited for rejection and stepped in after I saw a decent volume from the trendline. They cannot be the embarrassingly accurate length, otherwise, they would be extremely few, but they cannot be as in the picture below. Uuuh...this is ugly and actually, I see it quite often. The first and second points are too-too close considering the third touch. The third touch comes in the middle of nowhere but as said, it is a perfect way to talk you into the trade/investment. This is ugly, it is with a very low success rate so try to avoid it. The most important rules are in place and now it's a good time to talk about mistakes. I cannot say that they are 100% wrong but in general, these mistakes can be with a very low hit rate. Sometimes looks like we have all set and ready. We can draw perfectly from wick to wick, we have new higher highs after touches, we have an equal length between touching points but it just doesn't work. Obviously, from time to time it happens but most of the time there are some reasons behind that and one of them can be the angle of the trendline. It is a bit subjective but for me, the best angle of the trendline stays between +-20 to +-35 degrees (in TradingView you can use it). Then I can trust it the most. I remember that the most common mistake for me I tried to buy too sharp angles 45+ degrees. To long below 20 or above 35 degrees you should have a lot of criteria to match with the trendline to determine the strong setup otherways try to be cautious if it doesn't fit inside my given numbers. Next common mistakes: As you see in the image above, after the third touch, we haven't seen a new higher high but the price already touching the trendline. It isn't a good sign for further growth. Does the bulls have lost their momentum or for whatever reasons the market didn't print the new higher high. This can be simply one of the trend reversal signs, bulls have lost their momentum and cannot print new ATH for example. Read between the lines and do not consider buying from the trendline if the market hasn't made a new higher high. Obviously, you can but as said, it can be a bit lower hit rate. Here is also a second mistake, another no-go criterion for me. Do you know it already? Go and look... Yes, correct! ;) Firstly, we haven't seen new highs and secondly, the trendline touching points (1 to 2, 2 to 3, 3 to 4) are not at a similar length. The fourth touch comes too early/fast. Another rule which can ruin your "perfect" trade from the trendline. So, two simple mistakes to avoid. To get a better success rate from the trendline you should wait for a new higher high formation and the market cycles should be quite similar between touching points. Breakout trades. If the trendline looks strong but cannot get any support from other criteria then I'll start to look at selling opportunities after the breakout. As you can assume, this isn't as simple as some guys on YouTube will sharing with you. I have also some rules here to make breakout trades. Firstly, the price should come from an all-time high or from a mid-term high, print a short-term lower high, and then breaks. This is a good scenario because then there are some FOMO retailers who bought from the top, got a little hope for a bounce upwards, and as you should know, really often they get punished who bought the top. Secondly, and most importantly, the break must occur with a strong and powerful candle without any significant lower wick. Basically, if you have clean touches from the trendline then it has shown its strength and the strong candle break confirms it even more. How? If the price falls below the trendline just simply with small candles then it doesn't show the strength enough to trust it on the retest. A strong and powerful candle needed! We need to see that power because after the break we start to wait for a retest of it. The strong candle shows that the trendline is still valid but in vice-versa before it acted as support now it starts to act as a resistance. Another example. Let's talk a little bit about the timeframes. Obviously, the higher is the timeframe the stronger TL is. If I analyze stocks then I trust the most monthly and weekly timeframe. Considering crypto, there I use Daily and 4H but most likely Daily. To be said, 1H is the minimum. That's about it. The post got quite a big one. uuh...simple trendline yes?! ;) A lot of left unspoken (minor trendlines, how fast it can come to touch it and etc.) but in general you should get at least something from here to add to your analysis. Was fun to write it but this is just the beginning. I have 15 criteria to analyze the charts. Maybe I should write an e-book about technical analysis what you think!? :) Trendline is just one of them and it isn't even the strongest criterion on my list. Doing the analysis I have 15 criteria and depending on the timeframe 3 to 7 of these 15 must be in one strong area together! So don't just go for a trade/investment if you only have one criterion, the trendline. Hopefully, you like it, all the best! Vaido
COINBASE:BTCUSDEducation
by VaidoVeek
199
My experience as a breaokut trader on stocksFirst of all, what is a breakout trader? It's a type of style in which we look for a clear consolidation period, and we aim to trade after the pattern is broken. Check the main chart on TSLA to get the concept. The main idea of this comes from the Elliott Wave principle, in which consolidations tend to be the beginning of a new motive wave or impulsive wave. Why are we saying "Tend"? Because it's a probabilistic scenario, we do not have certainty about any given trade outcome. (We will speak about this later) Let speak about the main idea of this There are 4 types of corrective patterns that you can use to wait for a breakout. We have seen that the best structures to trade are Flat, Zig-Zags and Triangles. Irregulars tend to be confusing situations. now we will check some key ideas that we have learned Always trade above B and set your stop loss below the structure By doing this, you will be able to avoid many fake-outs, which will increment your Win Rate. Also, you must look for situations where you have a risk-reward ratio above 1.7 Here you can check an image where trading above B would have saved you from a fake-out. Context is Everything Never trade a structure because looks nice. You need to find a beautiful context for every structure you are planning to trade. Take this situation as an idea of a great place to develop a setup. What can you expect from this type of trading? You can expect to have a win rate between 45% to 60% depending on your level of accuracy looking for structures. And you can expect an average risk rewards ratio of 1.7 / 2 Thanks for reading!
NASDAQ:TSLAEducation
by ThinkingAntsOk
Raff Regression Channel (RRC) The Raff Regression Channel (RRC) The Raff Regression Channel , developed by Gilbert Raff, is based on a linear regression, which is the least-squares line-of-best-fit for a price series, with evenly spaced trend lines above and below . The width of the channel is set by determining the high or low that is the furthest from the linear regression. Because the channel distance is based off the largest pullback or highest peak within a trend, for effectively drawing and using a Raff Regression Channel it is recommend/required that a Raff Regression Channel is applied to “mature” trends. Once The Raff Regression Channel is drawn, covering an existing trend, EXTENSION LINES are drawn to identify support, resistance, reversal points, mean reversion Effectively drawing and using a Raff Regression Channel The trend is up as long as prices rise within this channel. An uptrend may be reversing (not always, but likely) when price breaks below the channel extension . The trend is down as long as prices decline within the channel. Similarly, a downtrend may be reversing (not always, but likely) when price breaks above the channel extension . Moves outside the channel extensions can be indication of a reversal or can denote overbought or oversold conditions breakout example reversal example █  LINK to AUTOMATED INDICATOR VERSION of RAFF REGRESSION CHANNEL █  OTHER CHANNEL CONSEPTS Linear Regression Channels, Fibonacci Channels, Andrews’ Pitchfork,
FX_IDC:XAUUSDEducation
by dgtrd
52
📚 Impulsive & Corrective Breaks - How To Identify & Trade Them 📚What is an Impulse? An impulse is defined as a strong move whereby the market moves quite strongly or heavily in one direction, covering a great distance in a short period of time. Typically, when there's a trend reversal occurring, we require an impulse in the opposite direction of the trend, indicating to us that there's a possible trend reversal. The question we face now is "What does an impulse need to look like for there to be a trend reversal?". Throughout my years in trading, I've found that if a significant level is broken during the impulse, we can expect a follow through of that impulse after a brief correction or a retest. In the Impulse diagrams, you can see that I've marked out a recent significant level where price reacted. When there was an impulse, I kept an eye on the level to see if it breaks. If it did not break, I can assume that the impulse wasn't strong enough to create a trend reversal and it is merely a bigger more aggressive correction. However, if the level did break along with the trendline, we can assume that there is a trend reversal taking place and we should keep our focus on the key level and price action for corrections such as flags, pennants , channels etc. Please see chart updates for examples of Impulsive Breaks and how to trade them. What is a Correction? A correction is defined as a relatively short-term movement of the market in the direction opposite to the main trend. To identify whether a break of a trendline is an impulsive break of corrective break, we must also identify the key level by looking at a significant level where price reacts. If the impulse that breaks the trendline does NOT break the level, we can assume that the trend isn't ready to reverse yet and it is a corrective break. Often a corrective break ends up with an impulse breaking the significant level, at which time we can look for a correction to take our trade. See chart updates below for examples of corrective breaks and how to trade them. Please leave a like and comment what you think! As always, Goodluck and trade safe! Mr Wick.
Education
by WicktatorFX
140
📚 Impulsive & Corrective Breaks - How To Identify & Trade Them 📚What is an Impulse? An impulse is defined as a strong move whereby the market moves quite strongly or heavily in one direction, covering a great distance in a short period of time. Typically, when there's a trend reversal occurring, we require an impulse in the opposite direction of the trend, indicating to us that there's a possible trend reversal. The question we face now is "What does an impulse need to look like for there to be a trend reversal?". Throughout my years in trading, I've found that if a significant level is broken during the impulse, we can expect a follow through of that impulse after a brief correction or a retest. In the Impulse diagrams, you can see that I've marked out a recent significant level where price reacted. When there was an impulse, I kept an eye on the level to see if it breaks. If it did not break , I can assume that the impulse wasn't strong enough to create a trend reversal and it is merely a bigger more aggressive correction. However, if the level did break along with the trendline, we can assume that there is a trend reversal taking place and we should keep our focus on the key level and price action for corrections such as flags, pennants, channels etc. Please see chart updates for examples of Impulsive Breaks and how to trade them. What is a Correction? A correction is defined as a relatively short-term movement of the market in the direction opposite to the main trend. To identify whether a break of a trendline is an impulsive break of corrective break, we must also identify the key level by looking at a significant level where price reacts. If the impulse that breaks the trendline does NOT break the level, we can assume that the trend isn't ready to reverse yet and it is a corrective break. Often a corrective break ends up with an impulse breaking the significant level, at which time we can look for a correction to take our trade. See chart updates below for examples of corrective breaks and how to trade them. Please leave a like and comment what you think! As always, Goodluck and trade safe! Mr Wick.
Education
by WicktatorFX
56
Horizontals and Breakouts: Using ETH as an ExampleThis is an education based on the LTCUSD chart that I posted today. I have also linked my previous education idea down below where I want to drill down one key fundamental: Participation matters, price DOES NOT. DO NOT get emotional seeing price (low or high), look at the participants to see how many people are buying/selling at these levels. Price DOES NOT always imply that there is participation. And Prices at bubble tops NEVER imply participation. Most people have bought/sold before these bubble top levels arrive. Here I show another example where the VPVR (Volume profiles at various price levels) predicted the correct line of resistance. Most charters DO NOT understand this. Patterns lie all the time. A lot of charters on Tradingview and REAL traders use the price tops/ ATHs to draw trend lines. PLEASE do not do this if there isnt meaningful participation/volume at these levels. Hope this helps clarify some arguments that people continue to have on where to draw trend lines from and if you are correctly capturing the wicks. Result: ETH while BOOM above 740 USD while most traders kept drawing harmonics and all sorts of short term pattern crap. Dont believe me? I have linked the idea to LTCUSD vs BTCUSD comparison down below. BTC breakout was at 12.4k when most people thought we will see resistance as we approach 20k. BTC blasted through all these levels.
COINBASE:ETHUSDEducation
by brotoshee
5
The Gap Up (1)Stock price has a gap up, how to confirm it is a true break out or a false break out? Maybe a tight consolidation is a method. Tips: This is forex, not a stock. But the tips should apply as well. Before the gap 2017 May, there were several times the price tried to challenge the resistance line. Once gap up, a false break out then followed by a tight consolidation, can say the resistance became support. After the consolidation, price broke out using a way called red three soldier.Then the second break out can be treated as buy hint.
Education
by yunwangvvv
Why S and R works so good - Spring & Upthrust WyckoffWelcome Traders to a new Educational Posts. Today we will have a deeper look at Support and Resistance. One of the most popular chart techniques out there, but the question?! Do they really work? Absolutely YES. But probably not like most of the traders think they do. That simple Break and Retest Strategy. NOOO! I would like to introduce you to the extended version of Support Resistance. The Wyckoff Spring and Upthrust. Wyckoff Spring and Upthrust In other words they are simply the Fake Outs at Support and Resistance Levels. The idea behind it is to get an entry exactly there where most of the trader will put their SL. -> WHY?! because of the LIQUIDITY The whole market is based on Liquidity (Supply Demand). The bigger fish will always win. Those who have the bigger amount will always dominate here. Just FACTS . So how do you want to position yourself in the market. Exactly there were 95% of the Retail Traders will put there SL? Or do you want to change your perception on how you view the market. This will completely change your view on the Forex Market. Supply Demand What I also do is I use my own style of Supply Demand to identify exactly those areas where most of the trader will put there SL and I will place exactly my Entry there with a very tight SL to get bigger Risk Reward. Of course I will not have that much of valid entries for my setups as they do not occur as often as Support Resistance Setups but the Total Risk Reward is a complete new Level. WHY? Example Upthrust Because you are rocking the market with the market movers. You are always clearing with these entries both sides. #1 Sellers at Resistance because of Upthrust #2 Breakout Trader(buy) because of Upthrust Sell is the right decision in this case but most of the Traders will lose that Trade due to SL hit. Everybody is placing the Entry and SL different but the majority is losing this trade. Spring Example This was the bigger manipulation as the price did a strong move to the downside through the level of Support. This level was a very interesting level for Retail Traders to buy. Doji occured for Price Action Confirmation but the price dropped down to the level of Demand. Why? -> Liquidity. All SL were located there so Market Movers had there buy limit order placed exactly there. Conclusion With this Post I do not want to judge Retail Traders using Support Resistance. Maybe you found a nice Strategy with that and you are profitable. I am also using Support Resistance but simply in a different way as you can see. I just wanted to share with you my thoughts behind Support Resistance and how I use them to be profitable Please leave a LIKE if you found this Post useful and share your thoughts below!
Education
by DariusFxTrading
3
Break support/Resistance , give confirmation?Break support/Resistance , give confirmation? - We usually trade base on S/R to find the entry point, exit or to predict the trend. - One of an effective and simple way in trading is to trade when price breakout from a S/R level - However, to identify an area or a point of good S/R in trading is mostly based on trading style, knowledge and trading experiences from each individual. Today I would like to talk about Breakout in trading. When it is breakout, when it is failed breakout. Before talking about breakout, we need to identify price closes above a S/R level or below a S/R level . Examine the below chart: However, in the chart we also find the situations that market didn't follow the mentioned rule. In the above case, if we carefully examine, we would see a pair of candle close below a resistance zone and make price go down. And price is still following rule of breakout and give confirmation as usual. There are a lot of S/R appear in trading market. So, we have to choose by our own which is the S/R zone to play in each situation depending on our own experiences. No situation is exactly the same with each other! In the same above situation, at the same S/R level that we identified and used before, prices move differently (at that points, mostly our stoploss is hunted) Here, experienced traders would easily recognize failed breakout based on trend analysis, or the way prices breaks, or at least don't follow the breakout. We can analyze in a simple way as follow: And then price continues its trend I have presented some simple cases of successful breakout, failed breakout or fake breakout in the above chart. I would like to receive the contributions from the community to learn from each other. Noone is right or wrong all the time. Every wrong or right cases have its own price. Hope that people would not keep silence instread of telling what you know or learned. Nothing has its own value unless it spent some prices. I hope that people would give a way their knowledge, don't try to hide for your own if not we are all failed to this market. More information www.investopedia.com
Education
by DatTong
14
EDUCATION: Simple Support LineHello, dear subscribers! Today we start our Educational series. We are going to public some elements of technical analysis every day. Definition The support level is the level which is likely not to be broken down by the price. It is a high probability of the bounce off this level. It occurs because when the price decreases, the demand is rising and the supply is decreasing. As a result the higher demand push the price up. How to trade with support We can get into the position on the support line level. For example, at the point (D) we already know that blue line is support (because of points (A) and (B). Also we have to use the stop loss level, if the price will substantially break this level down. If the price broke down the blue support (G), we can wait the yellow line price level to enter the position (3). It is also widely known that the price is likely to return back to the previous support (H) Summary 1)To define several support levels 2)To get into position on the first one 3)To fix a profit in case of price bounce 4)To fix small stop loss in case of huge breakdown 5)To buy again at the lower support. It is very effective strategy but there are a lot of cases, when support level definition is impossible.
Education
by Skyrexio
Chande Kroll Stop for validating breakoutI want to share a little trick for validating breakout from a narrow range. If more people use this method then it can become even more effective ;-) 1. Price crosses below both lines of Chande Kroll Stop and the area between two lines of Chande Kroll Stop is shaded, indicating price is breaking out of a narrow range 2. Bull bear power histogram paints red below 0 The shaded area is when the width between 2 lines of Chande Kroll Stop measures less than 2*atr(10)
Education
by priceactionta
J Shape FormationHello Traders! Have you ever wonder why the market turns back after the clear breakout of the trendline and even after a perfect retest?? Here is your answer. There must be The J shape above that trendline or above that resistance because this J shape mostly forms above the resistance. This J shape pattern occurs again and again and it's easy to find because of its clean and clear formation. These are the three shapes that form after the J Formation and the head and shoulder pattern is one of them. Formation 1 You can catch the drop at the peak by selling on the reversal candle or if there are continuous bullish candles then wait for the first bearish candle and go for the sell. In formation 1 it always drops hard. If Market already dropped hard then wait for the market to retest the bottom of the J pattern and sell it and target will be the same size as the J shape. Formation 2 In a rare scenario, it bounces back because there must be some strong support. This is also tradeable when you see the market turning back at support you can go for the buy. Formation 3 It's the Head and shoulder pattern and it can be traded when it's half completed with the help of this formation But it is not compulsory that Head and shoulder formation always have a clear J shape.
FX:XAUUSDEducation
by Aadil1000x
LendingTree: Bullish Technicals and Fundamentals ExplainedIn this analysis, I'll be providing an in-depth analysis on LendingTree, as well as an explanation on megaphone patterns and its bullish upside. What is LendingTree Inc.? Lendingtree (TREE) is a company that offers a platform for borrowers and multiple lenders, offering the opportunity for its users to find the best possible deal on their loans. Business Model - Users of TREE gain access to multiple loan offers, and TREE’s clients gain the benefit of a cost-efficient customer acquisition. - Essentially, LendingTree is a platform where people shop for money. - Lendingtree works with major banks such as Citibank, Wells Fargo, as well as mortgage brokers, p2p specialty finance institutions, and small businesses. - Their clients’ pain point is that borrower acquisition is a key constraint to growth. - They offer a personalized platform called My LendingTree in which users can track their financial credit and performance - Their cumulative user growth has been increasing at an exponential rate - One fact many people misunderstand is that LendingTree does not take a markup fee. - Their revenue comes from the payments made by lenders (their institutional clients), who pay to join the LendingTree marketplace. - TREE also gets paid by their clients when its users sign up for their loans or services. - While mortgage loans are their main focus, they are expanding into areas of: personal loans, auto loans, business loans, student loans, credit cards, saving accounts, and home equity loans. Financials - LendingTree’s revenue has tripled to $1.1 Billion by the end of 2019, almost triple the revenue of 2016. - They continue to demonstrate tremendous growth as consumers shop for mortgages over time - While their revenue was dominantly mortgage based, they have managed to diversify into generating revenue from non-mortgage related loans and services. - However, their operating expenses have also significantly increased due to huge marketing budgets, and their operating income is not as exponential as their revenue growth - Their quarterly revenue changes have been showing inconsistencies, and reported negative earnings for 2020 Q2. - However, the company demonstrates steady and strong free cash flow Technical Analysis - We can take a look at TREE’s weekly chart for long term insight - To begin with, the chart is currently trading within a textbook megaphone pattern - A megaphone pattern can be a continuation or reversal pattern depending on how prices react near the resistance - This pattern demonstrates 5 distinct swings, each getting larger than the previous one, - As demonstrated above, we are currently in the middle of the fifth swing - We can see that a reverse head and shoulders pattern has been forming since the third swing. - We have temporarily broken out of the descending trend line resistance (marked by the dotted blue line), and forming what seems to be the right shoulder - The formation of the right shoulder can also be seen as a bullish flag pattern, where prices are consolidating before a breakout - On the short term, we are consolidating below the 0.618 Fibonacci retracement resistance. - We have tested the pivot line support, as prices look to break out - Even if we see a rejection at the trend line resistance on the fifth swing, there is a 60% upside potential based on the megaphone pattern structure Conclusion With the Fed having said that interest rates will remain at near zero, and considering the fact that the US housing market is still in an uptrend, given that we see more recovery in the economy, we could anticipate huge growth for LendingTree as more users seek to get loans. The technicals demonstrated on LendingTree’s chart are also extremely bullish, making this stock a solid mid-term investment. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
NASDAQ:TREEEducation
by Michael_Wang_Official
2
The PitchFork - a great way to define and trade channelsThis is how I use pitchforks and I hope it is an inspiration for you too. I like trading channels and the pitchfork is a great way to identify them early on and to confirm these channels. It is not always straightforward to find the right points (1-2-3, see below), but I think the pitchfork is quite powerful and for me a handy tool in addition to other indicators and tools. If you have not tried it before, give it a go! Please leave your comments and thoughts so we can all learn and get inspired by each other!!! ************************************ HOW TO SET the PITCHFORK? A Pitchfork can help identifying a channel in a fairly early stage. Three points need to be used: 1. a previous pre-channel high/low 2. the new channel high 3. the new channel low If 2 is closer to 1 compared to 3 (vertically) then you will see a descending channel. Otherwise ascending. Point 1 will become the mid-line of the channel and serves as an additional support/resistance HOW TO DEFINE OPPORTUNITIES? Opportunities exist when the price touches the boundaries. #SELL - In this case we see 3 SELL opportunities when the price touches the upper bound #LONG - we see 3 LONG opportunities, one of which (partly) failed as it got resisted by midline, which is not uncommon and always a watch out. #BREAK OUT - We also see a clear break out that can be traded as well, especially after retest. As always with channels - I prefer to only take LONG opportunities for ascending channels and SHORT for descending. This channel is fairly flat, so both were possible. Always use this technique in conjunction with other signals. **************************************
Education
by channel-man