Trading with Median Lines /Andrew's pitchfork

[artoftrade]

Dear Kavima ,

Excellent post. Food for thought.

Sir ji, my basic understanding says Rel Ind is making HH and HL on H1 TF, so trend is still up unless and until 860 is not violated. (I'm trying to attach the image rigt now but will try tomorrow.(

Here Energy point is around 870 and may be tested from above and may give continuation to HH and HL.

This is just a opinion and being a new aspirant , I'm just trying all probabilities.

Pls correct me and guide me.

 

[trade4putuval]

Hi Kavima,

Thanks to trade4joisar for introducing me to your thread .

Kavima, Your trading setup looks excellent :thumb:. I have not tried it so far, but this one will add to my list of strategies for daily or positional trading (not a big list).

This is my first trial of your strategy on my favorite stock, Fortis. Fundamentally, I liked this company, so I am rollovering the stock future since the past 2 months. Please see your strategy applied using icharts.

Legend:Black line is 50sma. The other three lines are for my trading on 315 strategy, the red line indicating 15 ema, the orange line indicating 34 ema and the blue line indicating 3 ema.

Looking at the UML, RSI and MACD of the historical prices in the chart, the RSI peak coincides with the UML and the price starts falling from that level. But if you look at the RSI after a fall from every UML touched, the moment RSI touches 30 or goes below it, the price bounces back to touch UML again. I don't know if it is coincidence. Anyway, coming to my query!

The recent price movement of Fortis is in sync with your strategy and the price is approaching the median line (still too far to go). But I am concerned because RSI is approaching the overbought zone. So I am not in a position to decide if I must continue with the stock or exit. Can you have a look at the chart and let me know your views? I can take your views based on this chart as a reference point for all my future trades in all the other stocks and indices.

I am adding one more possibility, this time the pivot lines are taken based on the most recent fall.

Consider one more fan in your trading fan list.

 

[Kavima]

hi trade4putuval
welcome !
Median lines gives a good road map in a chart for the probable direction of the move.
Worked on yr stock Fortis and will run through my thought process so it can help u to understand how I would use median lines for a trading decision.

Uploaded with ImageShack.us

I first checked if any regular trendline channels could be drawn .There was one which i've marked in orange colour..The pivots used for drawing the green and the subsequent magenta PF were the pivots meeting the trendline channel.Price moving down in the magenta pitchfork met its median line and further down met the orange down trendline.This is the support zone and price has confirmed it and moving upwards.As of now the major trend is down and the price is correcting the steep fall.Currently it has moved past a minor swing high.Drawing a green minor pitchfork with recent pivots price has touched the UML and reached the first warning line equal to one range.Now, have we reached the resistance zone?Looking at the last 3 price bars , there is a wide range down bar, a doji bar and again wide red bar, indicating there is a resistance / pause in the price move.

Let's move on to the hour chart

Uploaded with ImageShack.us
Blue PF drawn with recent pivots.price has met the resistance at UML and the trendline drawn from previous highs.Stochastics shows bearish divergence so price will fall towards median line.Minimum target would be at 125 range. in maybe 2 days Price action at the median line will confirm whether it will move further down or reverse.This would also be a low risk entry for a long position.But SL is always kept in trade as market is supreme.

 

[trade4putuval]

hi trade4putuval
welcome !
Median lines gives a good road map in a chart for the probable direction of the move.
Worked on yr stock Fortis and will run through my thought process so it can help u to understand how I would use median lines for a trading decision.

...

I first checked if any regular trendline channels could be drawn .There was one which i've marked in orange colour..The pivots used for drawing the green and the subsequent magenta PF were the pivots meeting the trendline channel.Price moving down in the magenta pitchfork met its median line and further down met the orange down trendline.This is the support zone and price has confirmed it and moving upwards.As of now the major trend is down and the price is correcting the steep fall.Currently it has moved past a minor swing high.Drawing a green minor pitchfork with recent pivots price has touched the UML and reached the first warning line equal to one range.Now, have we reached the resistance zone?Looking at the last 3 price bars , there is a wide range down bar, a doji bar and again wide red bar, indicating there is a resistance / pause in the price move.

Let's move on to the hour chart

...

Blue PF drawn with recent pivots.price has met the resistance at UML and the trendline drawn from previous highs.Stochastics shows bearish divergence so price will fall towards median line.Minimum target would be at 125 range. in maybe 2 days Price action at the median line will confirm whether it will move further down or reverse.This would also be a low risk entry for a long position.But SL is always kept in trade as market is supreme.

Thanks! I exited at 132.5 and will look to reenter again at 125, the median line. But then, I looked at the stochastic in your hourly graph and it has just moved below the reference line which could mean more downside.

Need to understand how the magenta line is drawn. Will refer your post once again! Thanks for guiding me! :thumb:

 

[Kavima]

Updated chart 14.11.2011

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Setting up a trade and Projecting targets

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[Kavima]

FORTIS CHART UPDATE

hi trade4putuval
welcome !
Median lines gives a good road map in a chart for the probable direction of the move.
Worked on yr stock Fortis and will run through my thought process so it can help u to understand how I would use median lines for a trading decision.

Uploaded with ImageShack.us

I first checked if any regular trendline channels could be drawn .There was one which i've marked in orange colour..The pivots used for drawing the green and the subsequent magenta PF were the pivots meeting the trendline channel.Price moving down in the magenta pitchfork met its median line and further down met the orange down trendline.This is the support zone and price has confirmed it and moving upwards.As of now the major trend is down and the price is correcting the steep fall.Currently it has moved past a minor swing high.Drawing a green minor pitchfork with recent pivots price has touched the UML and reached the first warning line equal to one range.Now, have we reached the resistance zone?Looking at the last 3 price bars , there is a wide range down bar, a doji bar and again wide red bar, indicating there is a resistance / pause in the price move.

Let's move on to the hour chart

Uploaded with ImageShack.us
Blue PF drawn with recent pivots.price has met the resistance at UML and the trendline drawn from previous highs.Stochastics shows bearish divergence so price will fall towards median line.Minimum target would be at 125 range. in maybe 2 days Price action at the median line will confirm whether it will move further down or reverse.This would also be a low risk entry for a long position.But SL is always kept in trade as market is supreme.

[/URL] Uploaded with ImageShack.us[/IMG]

Wasn't it really faaast!!!! :lol:

 

[Kavima]

A brief writeup by John Crane on Median Lines

Swing Trading Strategies Using Price Action to Determine Market Direction


Hi,

John Crane here from Traders Network,

Would you like to be able to take a quick look at any market and be able to determine the most likely direction or know, in advance, where the market will mostly likely reverse?

Understanding price action can provide a trader with this valuable information. Dr. Alan Andrews identified these four trading principles after observing how price action reacted to a median line. Understanding these principles will help a trader always know the where prices are headed.


Four Trading Principles that always tell you where the market is headed.

Median Line Trading Principle #1 When a median line is drawn from the most recent swings the price should return to the median line approximately 80% of the time.

Median Line Trading Principle #2 When the price returns to the median line there often will be a pivot made on the median line.

Median Line Trading Principle #3 When the price returns to the median line the price will often form several small swings around the median line and touch the median line more than once before moving on.

Median Line Trading Principle #4 If the price does not reach the median line, the price moves in the opposite direction more than the previous swing.

Market Timing Intelligence uses these four median line trading principles, in combination with the Law of Action/Reaction, to identify high probability swing trading opportunities every day. Let me show you how these four trading principles are applied to real market situations.

 

[Kavima]

6.11.2011 chart

14.11.2011 chart

Updated chart 17.11.2011

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[Kavima]

An interesting article about Discovery of price using Median lines by the expert trader Timothy Morge..
The clear narrative on how each turning point is identified using ML's is a pleasure to read and lessons to learn from...

http://www.marketgeometry.com/index.php?option=com_lyftenbloggie&view=entry&category=public-blog&id=52%3Athe-discovery-of-price-yet-again&Itemid=133

 

[SavantGarde]

Hi Kavima,

My query for you is..... Do you ever look at or draw the extended parallel channel.... when using Pitchfork... Thanks

SG