The One: Price Action and Reaction

You have a lot of good charts... thank you for sharing. Feel free to post more. Your work reminds me of Jamie Saettele.

Chart Updates

Thanks Eaglestar. I have Paul Coghlan & Tim Morge to thank for this. Saettele charts like this? Don't remember him doing this when I followed him years and years ago (when Joel Kruger was still at dailfx!). I really like Coghlan's idea of using the fork to find the angle then detecting the 'frequencies' with that angle. I saw these strange coincidental geometeries for years when i first started but never knew what to make of them until I started down this road. Now it all makes sense . I've got some really mad examples of this working, so for something different, I'll post some stuff to broaden the mind if that's ok. Stuff for the real pitchfork geeks!

Bring it on Dr. O, I am always open to learning new things! Kapital is a super pitchfork geek He will love it

Eur provided the most clear example in my opinion, but if you were paying attention there were other trades to take. Also USDCHF long and a couple others.

Awesome! Ok, I'll post some more later, but this is one of my favourites. This just makes me laugh :

Get long for next 8 years.... great!

Haha! Thought you'd like it. Inspired by some of the crazy long range forks I've seen Morge use. On a serious note though, it does go to show you if you're patient with this technique there really is no need to trade every day. Or week. And certainly no need to give your hard earned capital to a hedge fund so they can underperform the index YoY for you.

I also put together this handy guide for trading the the USDJPY 4 Hour chart I posted previously:

And here's one that is actually useful - AUDUSD Daily, will she stay or will she go?:



AUDUSD 4H:

LOL....you are so right!

UPDATE

Chart updates

Thanks gentlemen, great stuff!

Feel free to add on...

15 MIN GBP/USD

great call on the yen. I was looking at it also

my .02

This was a bit interesting... a head fake up stop take out and resistance sellers enter, then break and brief retest of triangle then drop.

Yen for me:



Took a short yesterday off the lower trendline (last large black bar) but knocked out at BE not long after Yellen. Not the greatest setup in the world down there, that's why I was at BE quickly. Waiting to see if top trendline holds again.


Revised CAD a bit so making more sense of latest move, being very careful about this pair with all of the oil news going on- some days CAD wants to chase oil, some days it wants to ignore it. CAD making 'lower highs' now in the diagonal, so wondering if we get a breakout south soon. We'd have to see oil up/dollar down for that:




But WTI crude did just break out upwards from $45, so we shall see:

awesome, are those channels drawn auto or manually

manually - use the pitchfork tool, find the angle, then use lines parallel to the pitchfork to find the 'frequencies'. I wouldn't want to have them drawn automatically, finding the hidden frequencies is part of the creative fun and art of it. It allows you to be creative with charting so that your creative energy is not spilling over into 'being creative' when actually putting trades on. Very good for confidence building when you see them work out over a long period of time. Use them as you would any support/resistance. Put a line on - see if it works.

If you've ever used or looked at linear regression tool, it's kind of similar to that - linear regression works because it's a study of statistical deviation from the mean. And since this market is heavilly algo driven, and if you're programming algos you want to use statistical mathematics and the least squares line (line of best fit), this is why it works (I think! lol). But we do know that big players are using statistics because we often hear that a crash or ramp was a '5 standard deviation move' or some such:

AUDUSD 4H using linear regression tool (the 'secret' of markets is that they basically move around in a linear regression style fashion - go play with the linear regression tool, you might have a nice lightbulb moment):



AUDUSD Monthly with linear regression. "Do you believe it now, Trinity?"



But we can do much better and be much more accurate with pitchforks to capture and predict this. This also gives you the best trades on the chart with the least risk and most reward as you are always looking along the edges of price to find the spots where price doesn't revisit. If you trade in the direction of the diagonal only then you're rocking and don't have to worry about the rest of the noise. And if you're not catching the turn (which, lets face it- isn't always that easy), you can use a similar technique on shorter term trends within the larger daily or monthly trend.

Basically though, what it really comes down to is this:




Easy, right?


How much could you have made in this USDJPY downtrend just taking shorts off daily? Take part profit at 20 pips, move stop to BE and leave it, then just manage stops above swings (this is similar to how Tim Morge, one of the largest currency traders around, does it - check out some of his videos on YT). Do this across a range of pairs and you spend very little time staring at charts but still getting plenty of trades. Putting alert lines means you don't even have to look at the chart until you get a sound alert or email telling you price is at the 'edge':




and this is the fork (blue) and parallel lines taken from it (red):



Price has 'frequency', which can be very very accurate.


If you look at eaglestar's stuff earlier in the thread (which is excellent btw), you can use the 'stair step' s&r areas and trendline confluence to get in on smaller time frames.



(channel is slightly different than linear regression channel because the above was found with a pitchfork) this channel just broke, which is interesting, time to watch more closely - is it an outlier or the beginning of a trend change? Will we get a retest off the top or start stair-stepping down straight away? the market will tell you, just be really lazy and don't second guess the market, it will show you which opportunities are available that day - and if there are none, walk away. Brokers want you to play every day because it creates income for them from the spread, but it's not healthy to your bottom line some times. Take your time, for me this is half trading and half 'investing' in longer moves, best of both worlds.

If you're really interested, spend some time investigating Tim Morge & Paul Coghlan and the ideas on this thread. When it busts out of a fork, time to draw a different one, use of sliding parallels, andrews/schiff/modified schiff etc etc. The first page links on eaglestars awesome thread here will give you plenty to absorb.

This is different to what Kapital and Eagle are doing for the most part, but no more or less valid, this take on pitchforks just clicks with me, but Kapital/Eaglestar style will also find you low risk high reward trades for the same reasons, but I don't go below 4H (apart from entry) because I'm the world's worst overtrader - small timeframes scramble my head, I'm not as skilled at it as these chaps.

Here's something to get you thinking:



This also explains why you will sometime get a move above or below a line (i.e news / stoprun), but can continue to trust the channel - outliers caused by volatility.


To get your head in the right place, I found Zen in the Markets, by Edward Allen Toppel to be about the best 'book' (more of a pamphlet really) I ever read on trading. It's out of print now but there are copies on the internet to read, it's very short.


And that's it, apart from paying attention to horizontal s&r as you noramlly would in combination with your diagonal lines).
Really, that's all it takes. Just hone an entry technique based on this. But I'll leave that bit up to you




(sorry Eaglestar - hope I'm not confusing or muscling in on your thread!)