The One: Price Action and Reaction

The strategy is still the same. I was teaching about the basics of support and resistance and how to see them on the chart. Using Andrews Pitchfork, you are looking for the support and resistance within the fork, as well as how it corresponds to the horizontal support and resistance levels. You have to learn to walk before you can run. I hope this makes sense.

Here is a pretty clear chart. This is a pretty well known drug... Facebook. If you can easily spot the fork, or the AR set, then sometimes you don't have to guess about how strong the horizontal support or resistance is. To see it on the chart is good, but how do you interact with that information later? I am still a student, always learning.

Another clear fork on Gold

Crude Oil (CL)
yellow line is from higher time frame.

Thanks a lot for your charts.
I'm newbie with fork and horizontal support resistant as I never used them before. Used only supply and demand in the past.
Found on FF an easy pdf about forks and how to objectively draw them and starting to mark them on chart.
The tricky part is how to use them?
You mentioned about deriving horizontal S&R from forks.
Never heard about that and would be nice if you can explain how you do it.

Cheers

My condolences to you and your family. Welcome back.

Almost to the white median line but this mean the blue one was wrong.
If so, how to know this in advance?

Hello Merka,
I hope you don't mind my comments. Your chart contains a very large amount of data (zoomed out) and the ML you've drawn is on a very small portion of that data at the far right. The only data relevant is that which your ML is attempting to define. Therefore you can zoom in quite a bit. Below is how I would view it.

MLs are primarily intended to define and project swings. In general Pivot A to Pivot B projects Pivot C to Pivot D. You'll notice that in an uptrend this projection may lead one to attempt counter trend trades (C to D). In practice it is helpful to wait for price to fulfill the C to D projection then seek long opportunities (in an uptrend) even if price descends below the center median line.

Some also like to use the lines as diagonal support and resistance but I believe this tends to lead many potential ML traders down the wrong path looking for MLs that support their notions of diagonal support and resistance rather than projections. Diagonal support and resistance may be helpful but it is not primary in using MLs.

It is helpful to think in terms of trends when using MLs. Therefore when there are HHs and HLs as we can see in the chart below then we know price is trending up. With this information we can draw a meaningful median line using the HHs and HLs as shown.

MLs are really designed to project more than they are to act as support and resistance so I'll speak in terms of projections rather than support and resistance.

Given this we can say that Pivot A to B projects Pivot C to D. Notice that Pivot B to C is an impulse leg in this trend and after an impulse we expect a corrective leg. Pivot C to D is the corrective leg and will remain so until price breaks below Pivot B. After the corrective leg we can reasonably expect another impulse leg for a new high.

Therefore when using MLs many look for the termination of corrective legs as potential entry points.

Notice that C to D has already been fulfilled and in fact price significantly fell below the center ML. According to Andrews rules when this happens one can expect a retest of this area (the center ML) and then a potential resumption of the downward motion of C to D. Price did retest the center ML but it went back through to the upside and has now come back down and is testing the center ML again (seems to be acting as support imho).

Despite the dramatic price decline since FOMC the upward tendency of the ML is still intact.

There's a lot to unpack here in what I've said but it's a start.

EURGBP 60 minute chart:

Price trending down overall. Note LLs and LHs.
Last swing in the trend denoted with blue ML drawn L-H-L. Previous swing denoted with pink H-L-H ML.

Given the blue ML price projects to the ML and has not reached it yet.

Given the pink ML the sliding parallel suggests price might turn to the downside with projection being the pink A-B

ES 5m
Yesterday and today

ES 5 Min
Showing topping possible

Eur 1h recent drop with Sliding Parallel near the Warning Line 1

Thank you kapital been a rough ride the last year and half.

NQ Daily, 4h, 15

ES 5m

Eur
1h 4h
Weekly- originally posted in AlexC excellent thread

Recent Eur 5m fork
Dashed line is higher timeframe. Showing for example.

USDJPY 4h

5m ES
5m Eur

A few random charts. I was teaching a trader the basics yesterday and thought this may be useful to someone.

Notice how the warning lines on Soy (ZS) act as AR lines in the past showing recent highs.

ES
5m/1/15
MTF analysis
This is more advanced price action reading I am using.

I used the APF as an AR Set, using the price action on the middle line on the 4th shot as a centerline.