The tail of two pitchforks - two entries and a forecast!!
Hello fellow traders,
Hope all is well.
Today I bring you a tail of two pitchforks that share two pivots. This however is where the similarities end and the fun begins.
As the market moves aggressively UP towards the Dollar Yen's previous High in late April 2022 @ 131.253 directly following the FED's Interest rate decision we begin our pitchfork analysis.
Step 1: For both Pitchfork 1 and Pitchfork 2 we begin by numbering the left and right shoulder P3 (High) & P4(Low) respectively. We then continue to number the rest of the pivots P2, P1 and P0 in that order.
For regular Pitchfork 1, P2 becomes our "Anchor" pivot and for Pitchfork 2, P0 becomes our "Anchor" pivot.
Now, my 1st entry trigger/trade 1/pitchfork 2/tight stops was on a negative candle close following the median line touch see chart. You see, the P0 - P3/P4 pitchfork 2 is primarily used to isolate the P5 reversal usually located at the Median Line or if exceeded the next median line parallel. This is important as we can expect a strong change in trend. I will discuss other reasons for entry later.
Now, my 2nd entry trigger/trade 2/pitchfork 1/tight stops was on the confirmed retest of the lower parallel following a "Downward Zoom" candle that breached it. Was I confident on this short? Hell Yeah!! Question is " What was giving me the confidence? What was I expecting as a take profit? lets continue...
So....What was giving me the confidence in trade 1
1. A negative candle close at the median line "Direct Hit" on pitchfork 2
2. Price was at a possible double Top
3. I was hovering over a possible P5 pivot which would automatically mean a "price failure" trade on pitchfork 1..!!
These 3 "reasons for entry" was 80% of my confirmation the other 20% ( I may discuss in another post ) was just gravy.
So....What was giving me the confidence in trade 2
a. P5 ( Pivot 5 ) on pitchfork 2 was all but confirmed
b. A breach of lower parallel and the retest on pitchfork 1 (this confirmed the "Price Failure" ie failed to reach the median line)
c. An all but "confirmed" double top
d. my expected take profit target was at least 270 pips!!
Now, why was I expecting as a take profit of at least 270 pips? and What's a price failure? I hear you ask..
Well Andrews gave us one the most powerful rules regarding a price failure....that being...When price "fails" to reach the median line the reversal of trend following a breach of a parallel line ( moving outside of a regular pitchfork ( see pitchfork 1 ) will travel a greater distance than the swing that preceded it!!
That's right, the previous swing was around 270 pips which gives us a minimum take profit of 270 pips but more likely to exceed it ...as we speak it has reached 300 or so pips before swinging back up....
So here is where the story ends, A price failure, more often than not, will indicates a P5 reversal and a great take profit target!! I'll let you work out the Return to Risk Ratio.
Cheers
RB
Hope all is well.
Today I bring you a tail of two pitchforks that share two pivots. This however is where the similarities end and the fun begins.
As the market moves aggressively UP towards the Dollar Yen's previous High in late April 2022 @ 131.253 directly following the FED's Interest rate decision we begin our pitchfork analysis.
Step 1: For both Pitchfork 1 and Pitchfork 2 we begin by numbering the left and right shoulder P3 (High) & P4(Low) respectively. We then continue to number the rest of the pivots P2, P1 and P0 in that order.
For regular Pitchfork 1, P2 becomes our "Anchor" pivot and for Pitchfork 2, P0 becomes our "Anchor" pivot.
Now, my 1st entry trigger/trade 1/pitchfork 2/tight stops was on a negative candle close following the median line touch see chart. You see, the P0 - P3/P4 pitchfork 2 is primarily used to isolate the P5 reversal usually located at the Median Line or if exceeded the next median line parallel. This is important as we can expect a strong change in trend. I will discuss other reasons for entry later.
Now, my 2nd entry trigger/trade 2/pitchfork 1/tight stops was on the confirmed retest of the lower parallel following a "Downward Zoom" candle that breached it. Was I confident on this short? Hell Yeah!! Question is " What was giving me the confidence? What was I expecting as a take profit? lets continue...
So....What was giving me the confidence in trade 1
1. A negative candle close at the median line "Direct Hit" on pitchfork 2
2. Price was at a possible double Top
3. I was hovering over a possible P5 pivot which would automatically mean a "price failure" trade on pitchfork 1..!!
These 3 "reasons for entry" was 80% of my confirmation the other 20% ( I may discuss in another post ) was just gravy.
So....What was giving me the confidence in trade 2
a. P5 ( Pivot 5 ) on pitchfork 2 was all but confirmed
b. A breach of lower parallel and the retest on pitchfork 1 (this confirmed the "Price Failure" ie failed to reach the median line)
c. An all but "confirmed" double top
d. my expected take profit target was at least 270 pips!!
Now, why was I expecting as a take profit of at least 270 pips? and What's a price failure? I hear you ask..
Well Andrews gave us one the most powerful rules regarding a price failure....that being...When price "fails" to reach the median line the reversal of trend following a breach of a parallel line ( moving outside of a regular pitchfork ( see pitchfork 1 ) will travel a greater distance than the swing that preceded it!!
That's right, the previous swing was around 270 pips which gives us a minimum take profit of 270 pips but more likely to exceed it ...as we speak it has reached 300 or so pips before swinging back up....
So here is where the story ends, A price failure, more often than not, will indicates a P5 reversal and a great take profit target!! I'll let you work out the Return to Risk Ratio.
Cheers
RB
Comment:
For a closer view and the " Other " reasons for entry I have attached this chart where I introduce a few more tools in my decision making toolbox namely The Modified Schiff Pitchfork which picks up the " Frequency " of the move up and the two " 3 Touch trend line " When the ALL MEET on the same bar go on RED ALERT!!
Comment:
Keeping with theme but zooming in to the same chart we see the second fork confirming the price failure. Do you see how Both Pitchforks are used for complementary reasons ie. The Modified Schiff " Isolates " the Reversal essentially giving you a small window where Price and Time Converge and the Regular Fork confirms the reversal via the Price Failure and provides the entry as the market exits the lower parallel.....Cheers RB
Comment:
Zooming in on the Entry / Take Profit Targets based on 2 regular pitchforks one small one large.
