my take is as follows: Step 1: find price in a primary uptrend and mark it with a trend-line. marked out here is the uptrend following hourly candle closes.
Step 2: on the break of the primary uptrend, observe for a definitive new swing low. mark the new secondary trend-line (note: to qualify as a chuvashov's fork, the secondary trend-line has to be in a uptrend, albeit less steep).
Step 3: price breaks below the secondary trend-line and triggers a short signal. the trade idea below shorts at the break, and uses the recent swing high + an approximate average true range, for a stop-loss.
interim note of caution: in this case, BTC broke up from the location of the short and retested the secondary trend-line. working with trend-lines for awhile now, i've noted this is a regular occurrence that trend line traders should be prepared for. in this case, placement of the stop-loss would have made or broken the trade.
Step 4: the strategy shown below chooses to place the stop at the recent swing high, with a buffer room of 1-2% (alternatively use the daily average true range (ATR) for a more statistical measure). the sell order shown assumes the practice of laddered sells placed up into the area of idea invalidation.
Step 5: Profit. price came pretty close and got stopped [to the pip no less] by the orange hourly order block.
Conclusion: the trade made it home in the end after a brief period of consolidation. This final chart summarizes the two sell set-up of the trade, and explores an additional technique of stop placement for the visually inclined: double the most recent swing high's wick's length (as proxy for volatility).
Congratulations, you have now learned how to trade the 'Chuvashov's fork' set-up utilizing classical trend-lines. Here's a quick recap in chart form:
In closing: I hope this piece proved useful in broadening your understanding of TA trade set-ups made possible by classical trend-lines. Feel free to shoot any queries you might still have via mail or DMs through social media or messaging platforms.
Thanks for this. Can you do one on NANO USD 1D please? Scenario were the 3rd fractal is above the main trend line, but PA has moved below (w/o a fractal just yet)
Would this currently be more a way to setup a short, or will it signal a breakdown of the uptrend? Thank you
cryptotaku
⋅
Guess this is also in play
cryptotaku
⋅
Corrected, to follow first 3 fractals
cryptotaku
⋅
A new HL fractal printed. My question is, would this the dotted CF be the main interest of trade, or still the main bold uptrend line?
ZonedOutDad
⋅
@cryptotaku, honored that you'd ask but as i haven't explored this set-up with alt coins as much, i can't comment with any degree of confidence. Feel free to @ me in one of the discords i'm in if you wanna bounce some ideas. have mentioned a couple on my twitter that i like. Cheers man