Wednesday, 7 November 2012

Reaction lines Multiple Pitch Fork- Q: which forks in play?

Answer: multiple forks in multiple time frames and too many to draw and still retain a coherent understanding of price. Hence the importance of only illustrating the most significant forks/and reaction lines is paramount.
This is the emini S&P Dec12 chart with one fork added. I consider this fork to be one of the most important forks in the recent period of price behaviour:It has a pivot value of AB 89.4 D. This value is my way of scoring the fork and relates to its score out of a possible total of 100 as calculated using a pivot formula of the three pivots P0 P1 & P2

Now we add the reaction lines manually for this fork alone-I have extended them slightly where price leaves the upper boundaries of the fork. Take a careful look at the behaviour of price at each and every reaction line drawn-some work some do not.
Now we drop down to the 60 min chart The upper tine of the fork ( UMLP) is seen in black and now seems to offer significant resistance despite the fact that price has been above it before.
Now we add the template to see what information is being offered by the indicators + Heiken Ashi bars/BB's and 2 MA's ( not seen) etc etc
 If you want to learn how i combine these methods as a profitable trading system CLICK HERE 
because in order to truely understand and follow price you need to see it in the context of multiple PF's and their reaction lines and build a picture of the support and resistance offered by the structure or 'landscape' that these linear studies create. Here below two of several studies that offers more information ( mini Dow and emini S&P) and use the custom indicator to draw all the lines after you choose your 3 pivots for each fork.
 Heres the emini Dow in 2 TF's daily and 240 min

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