I have discovered a very simple and surprisingly effective way to construct pitchforks based on Hull MA (100), in all of the similar cases a sliding parallel near the middle line has worked as a high-probability target. Should price move so rapidly that it penetrates thru the middle line you can expect target #2 to be reached, however it is more common for price to produce several bounces to the upside before heading to the bottom line. Each bounce will be your shorting opportunity. Make sure to hide stops a bit above the latest bounce structure!
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It may be worth trying a short already, either right now at the pitchfork line or a bit higher at the structure.
Trade active
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I ended up shorting @ 2 107 between the first and the second structure with a stop @ 2 115. I hope this is it.
Trade closed manually
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I closed the trade with a tiny profit when it became apparent that price is heading higher. Now reverting back to my original plan.
Congrats on discovery, do you know what percentage of the time price hits the middle line? And if I may, very curious, why do you use 100 day? why not 50, or 200 etc..?
mr.dmizer
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Hi John! So far I have only conducted three trades in this manner, two of them were successful and one on GBP/USD yesterday went against me when the stimulus was announced. However I have been observing this pattern across different assets and timeframes for over a month since my discovery now, and it APPEARS to have just the same hit-ratio as a correctly placed pitchfork based on price pivots. That means it hits around 80 % of the times.
I have developed a small set of rules that goes along with this strategy, one of them - the main one says that I need to find two shallow but quickly formed "humps" on the MA in order to place a pitchfork. 100-period Hull for some reason produces most of these "humps", and they begin to disappear if you start changing this value. Other types of MA seems to be unsuited for this task altogether. Humps must be in a stepping down order if the market is high and in a stepping up order if the market is low. PM me if you wish to know all of the details.
JohnKer
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Adds a whole new line of thinking....to try the concept on trendlines, moving averages of different kinds, VIX, numerous other indicators blown up in the background of the price chart, etc. Great thinking on your part!
mr.dmizer
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But most of this stuff will float around. MAs are at least connected to price so they are like the only thing you can use this way.