Andrews Pitchfork (Median Line)

can someone direct me to a strategy based on action reaction lines??

The attached chart shows a simple example of action/reaction. The key to the principle is to find a valid center line and measure back and project forward equal distance. These do not have the higher probabilities that median lines have. You can also have a horizontal or diagonal center line to measure up and project down or visa versa etc. Some count bars back and forward, some call it symmetry, and on and on.

I am a big fan of simulated trading ideas before even thinking about live trading something new so don't take this as trading advice but instead something to study.
Curt

USDJPY

AUD

This EU H1 chart shows an Andrews pitchfork (black) that is a common use of the lowest-low for pt1, a significant high for pt2, and a very big pullback for pt3.

And yet... it really didn't show very good resonance or precision for quite a long time until after PA broke below the LML and then the Warning lines came into play. Price loosely climbs the 1st warning line, then the next quartile out. It's not until the 3rd Andrews Warning line that it shows more precision with the bounces.

The ModSchiff (magenta) is also drawn and it in fact has more points of resonance. You can see on the left it has some decent PRE-fork resonance, which of course is resonance you wouldn't have seen until after the 3rd pivot was drawn. When there is good pre-fork resonance, it can be a good sign that the fork *may* resonate in the future.

And yet... there is only a little ModSchiff resonance soon after the fork was drawn, then days later it builds in resonance with the ML, LML and 1st Warning line, and a quartile.

Most of the obvious points of resonance are circled (pink for ModSchiff, gray for Andrews). The best points are those that are very precise touches of the High-or-Low of the bar. Next best are those points that show the bar Closes occur right on the lines. A few almost-touched points are circled but these are so hard to trade if one is waiting for just a bit closer approach to the target that never occurs.

There are a lot of pivots on this chart, and plenty more pitchforks can be drawn as one desires. But this fork would be a good one to keep around, especially as it started to resonate best in the later part of the chart.

Thank you....

FWIW

Liking those grids. I don't see down sloping fork in your chart, not necessarily needed but my bias is still SHORT for the EURO, same as AUD, chart posted. Seems like the price is testing the diagonal resistance line which is at the same time at horizontal resistance (last bull candle from last week).

We'll see how it'll play out. The pink fork is a keeper for sure, I like PINK...just kidding.

EU
chart

EU is approaching a confluence point as indicated by the yellow box.

PS: The chart is based on GoMarket's MT4 platform, but my InteractiveBrokers's data shows quite differently to it and there is no confluence at all.

...

I added a modified schiff.

...

...

The resonance of these far-away Warning Lines has continued for both of these Andrews and ModSchiff forks since my previous post.

Dead on the money!

Yet another line of resonance, this time at the Andrews WL7. These WL7 touch-and-bounces are to a high degree of accuracy; the very bottom was a 0.3 pip overshoot of the line, and most of the other touches are within 0.5 pip.

The difficulty with trading these bounces, so far, is that most of the touch-and-bounces have been on the underside of price, and they have only served as temporary support resulting in small pullbacks. If one is short, they make good targets to close shorts or at least avoid adding to shorts there. They could make good targets to go long, perhaps, but it's counter-trend and riskier, and as mere retracements (so far) instead of reversals, the reward for longs has been limited. It would be nicer to have more touch-and-bounces at places of resistance where the trend (short) resumes.

PeterE, you've shown a lot of forks like these, where you highlight how the extended warning lines are still in effect. Most of your examples showed good spots to join the prevailing trend. For whatever reason, these lines just aren't playing out that way.

I made a slight adjustment to the purple upfork after noticing it wasn't placed precisely on a pivot.

I also adjusted the the bottom sliding parallel in the previous chart to where the bottom arrow is (previously it was based on the position of the top sliding parallel).

I also added a modified schiff (white fork)..

http://screencast.com/t/0JWNQQ8R7ymd

Here is a followup to my USD/CAD chart. The last one is my preferred choice.

EU-daily

time to take a break?
time will tell