Trading with Median Lines /Andrew's pitchfork

[Kavima]

Its the short form of
Lower Median Line Parallel - LMLH
Upper Median Line Parallel - UMLH
Median Line - ML
Warning Line - WL

 

[priceaction]

thax for sharing such beautiful price action...will explore it more

 

[Kavima]

Median Lines as a Price Magnet
History of the Median Line Method
( excerpted from book by Greg Fisher on "Using Median Lines as a Trading tool")
The Median Line method was developed by Alan H.Andrews to assess the market direction by drawing a single line on the chart of any stock.His study of the method determined price action returned to the Median line 80% of the time.
He created a course called Action- Reaction Course in the 1960's and 1970's for students and hi called his method the Median Line Method.
Andrews believed the markets exhibited an order that could be identified.
Of the two kinds of change in the Universe, flowing change and random change, we are indebted to Newton's invention of Calculus that enables us to find out in advance the conditions that flowing change will produce in the future. His discovery of the natural law that Action and Reaction are equal and opposite in the field of physics also has been applied in the Course to the random changes of price movements in free markets. This application of the Action-Reaction law enables you to learn in advance where the probable reversals of price trends will come in the future.
When we speak of any scientific law, we mean a statement that a relationship has been observed among certain given conditions. We mean, "if these conditions now, then those conditions follow, and can be expressed mathematically". We have "order" through which we can know the outcome from these conditions. We can therefore take advantage of this knowledge, and thereby progress and profit.
So Newton was one of the great discoverers of this "orderliness" that underlies all of the Creator's work, even if we are often slow in discovering it. Newton's Laws therefore as stated above, have benefited the users in both flowing and random changes.

Andrews original course states five observations concerning the Median Line (ML).
There is a high probability that:

1.prices will reach the latest ML

2.prices will either reverse on meeting the ML or gap through it

3.when prices pass through the ML, they will pull back to it

4.when prices reverse before reaching the ML, leaving a space, they will move more in the opposite direction than when prices were rising toward the ML

5.prices reverse at any ML or extension of a prior ML.

The book is available free "Using Median Lines as a Trading tool"on the net and those interested can download and read the material.
The original Alan Andrews course material is also available at www.trading-naked.com and should definitely be studied for a greater understanding of the concepts.I also have the link in my blogspot " NiftyTradeswithPitchfork".

I hope you will also be enthralled by this method as I did , though in this age of computer algo trading and mechanical trading , one will have to have patience to understand the concepts, practice and trade realtime with a system created around is method . Hope my sharing of my experiences will help.

 

[4xpipcounter]

I'm just curious. Can you show us, through the eyes of you chart, the direction a market will take and give an approximate target?

 

[Kavima]

Basics of Median Lines
Some definitions before we go into trading setups...
ML - Median Line
LMLH- Lower Median Line Parallel
UMLH- Upper Median Line Parallel
Pivots - marked as P0,P1,P2,P3,P4 etc..or A,B,C,D,E....etc
Schiff ML- Schiff Median Line
WL- Warning Lines
MML- Mini Median Line
SPL- Sliding Parallel Lines

 

[Kavima]

hi 4xpipcounter

I will upload more of latest charts on my outlooks.For latest Nifty updates I'm posting in another thread
http://www.traderji.com/futures/53485-nifty-entry-exit-target-levels-median-line-charts.html
For some old charts where the continuous daily charts can be seen with my projections can be accessed at this thread also
http://www.traderji.com/advanced-trading-strategies/41914-nifty-andrews-pitchfork-3.html

 

[Kavima]

Hi friends

refer my previous post on SBI....
http://www.traderji.com/advanced-trading-strategies/59403-trading-median-lines-andrews-pitchfork.html#post586696

Short term Trade-State bank of India followup
Working on the SBI 60 min chart in the weekend .Last week I posted the chart and here's the followup chart and what I forsee may unfold...Before that, some may not be able to understand the chart with so many lines and wonder what the !! this is all about...But Median lines is a wonderful concept which does capture harmonic nature of the the markets swings .You will just need practice with drawing median lines on charts and studying the interactions of the price bars with them.
I have been following Timothy Morge,( a trader who has been using median line concept extensively),his articles where he explains so lucidly how to analyse the charts and look for trades.The articles are priceless and will give you an insight on how this alternate method can be used for trading as against systems and tables computing numbers.(One can combine / integrate them into a method..it's upto each trader's choice...I too combine the median lines with Moving averages, Stoch indicators..More about it in the following posts..)

The trader should not allow his opinion to cloud his trades on one direction only.Both probabilities should always be looked into, and entry points to be defined with the minimum stoploss point.So here's the recent SBI chart below..

Last chart, the 1900 range was spotted as the breakdown point.The next day, it held on well and climbed up to reach well beyond our target at the Upper Median Line parallel-(UMLH) to reach higher and hitting the sloping magenta trendline of the two previous highs.Price gapped down further and hit a low( Point L) very close to the red median line.As on 23rd September it has retraced 61.8% of the downfall.(Point M)
What next??
Drawn a green Schiff median line( A median line set where the pivot where we start drawing the median line is shifted to 50 % R point of the previous swing )
Price has touched the Median Line and closed slightly lower than the High.This is also near the red UMLH.So , a point of resistance.How I look at this wave pattern is, the fall from high to Point L was a straight fall, an impulsive wave.The next wave has retraced it to reach 61.8 %.Assuming a 3 wave pattern to develop for the swing to be completed, one probability is the price to fall down is till Point N.But wait, at the green upsloping Pitchfork at the Point F there could be support - we have been earlier supported at this point (horizontal at Point L).So if support at F holds, the climb could move on to Point G and further up till it meets the Blue median Line at around 2000 levels.There it meets up with the resistance at the Blue and Green Line, Trendline of Highs and expect it to fall down till Point I,and then near to Point O.If Point O at the blue Lower Median line holds up then upmove can commence.
If Point F breaks then the target would be Point N, O and then Point P.
How did I arrive at point P?.
1.The breakdown of point F is a H & S breakdown and the height of the rise will be approx equal to the fall.
2.Parallel to the trendline drawn at highs drawn a magenta parallel trendline from the higher low ( where the blue median line starts).The intersection of this line with the horizontal from bottom price gives the target zone where the price can fall down to and halt.If the point N holds well, then we would have an Inverted H & S pattern which would augur well for an upmove.

I hope I've not made it look very complicated, as I've just run through various possibilities for the price moves.Again Market is supreme and we have to take care of our capital with stoploss for every trade decision.

 

[DanPickUp]

Hi Kavima

First of all : Thanks to post on this subject.

I love the concept of just using s and r and trend lines. It gives very good results, may not say even top result.

I include also other tools in my charts, but this is of no question here.

I had a look at your last chart in the last post and I would like to ask a question :

Don't you think it is a bit over done ?

Would more simplicity not do the work ?

Would be pleased to see, that you not take this as an offend question.

DanPickUp

 

[4xpipcounter]

Kavima, I agree with you totally on your views concerning median lines.. I've talked a lot about how there is always a gravitational pull back to a median line. In ichimoku, once price is in the cloud (Ichimoku's version of the median.), a state of equilibrium has been created.

Any rate, I like to take a break from my thread and forecasting to come over here to be one of your students. Thanks again for your insights.

Hi friends

refer my previous post on SBI....
http://www.traderji.com/advanced-trading-strategies/59403-trading-median-lines-andrews-pitchfork.html#post586696

Short term Trade-State bank of India followup
Working on the SBI 60 min chart in the weekend .Last week I posted the chart and here's the followup chart and what I forsee may unfold...Before that, some may not be able to understand the chart with so many lines and wonder what the !! this is all about...But Median lines is a wonderful concept which does capture harmonic nature of the the markets swings .You will just need practice with drawing median lines on charts and studying the interactions of the price bars with them.
I have been following Timothy Morge,( a trader who has been using median line concept extensively),his articles where he explains so lucidly how to analyse the charts and look for trades.The articles are priceless and will give you an insight on how this alternate method can be used for trading as against systems and tables computing numbers.(One can combine / integrate them into a method..it's upto each trader's choice...I too combine the median lines with Moving averages, Stoch indicators..More about it in the following posts..)

The trader should not allow his opinion to cloud his trades on one direction only.Both probabilities should always be looked into, and entry points to be defined with the minimum stoploss point.So here's the recent SBI chart below..

Last chart, the 1900 range was spotted as the breakdown point.The next day, it held on well and climbed up to reach well beyond our target at the Upper Median Line parallel-(UMLH) to reach higher and hitting the sloping magenta trendline of the two previous highs.Price gapped down further and hit a low( Point L) very close to the red median line.As on 23rd September it has retraced 61.8% of the downfall.(Point M)
What next??
Drawn a green Schiff median line( A median line set where the pivot where we start drawing the median line is shifted to 50 % R point of the previous swing )
Price has touched the Median Line and closed slightly lower than the High.This is also near the red UMLH.So , a point of resistance.How I look at this wave pattern is, the fall from high to Point L was a straight fall, an impulsive wave.The next wave has retraced it to reach 61.8 %.Assuming a 3 wave pattern to develop for the swing to be completed, one probability is the price to fall down is till Point N.But wait, at the green upsloping Pitchfork at the Point F there could be support - we have been earlier supported at this point (horizontal at Point L).So if support at F holds, the climb could move on to Point G and further up till it meets the Blue median Line at around 2000 levels.There it meets up with the resistance at the Blue and Green Line, Trendline of Highs and expect it to fall down till Point I,and then near to Point O.If Point O at the blue Lower Median line holds up then upmove can commence.
If Point F breaks then the target would be Point N, O and then Point P.
How did I arrive at point P?.
1.The breakdown of point F is a H & S breakdown and the height of the rise will be approx equal to the fall.
2.Parallel to the trendline drawn at highs drawn a magenta parallel trendline from the higher low ( where the blue median line starts).The intersection of this line with the horizontal from bottom price gives the target zone where the price can fall down to and halt.If the point N holds well, then we would have an Inverted H & S pattern which would augur well for an upmove.

I hope I've not made it look very complicated, as I've just run through various possibilities for the price moves.Again Market is supreme and we have to take care of our capital with stoploss for every trade decision.

 

[ashwani chadha]

example of charting and understanding trend


here i've attached a nifty daily chart with the median line drawn with upper median line parallel and lower median line parallel.

how do we interpret and form an opinion of the trend and where the prices are heading?

we start the median line from an important pivot point and draw the line through 50 % of the next major retracement / swing.parallel lines are drawn equidistant from the median line through the extreme pivots of the retracement swing.the median line set can be drawn as soon as the price crosses 38.2% r of the retracement swing.
Now , the lines are ascending and we call this an ascending pitchfork and the trend is moving up as long as the price is contained within these parallel channels.
The price will not move up in a straight line and will alternate between rallies, retracements and consolidation periods .
The basic concept for the trade decisions are
1.lower median line parallel is a support line.testing and retesting of this line gives a good entry point for buy.
2.when price climbs up and meets median line,
2a.it will meet with resistance and retrace the upswing recently completed.
The retracement can reach the lower median line parallel again or after a minor swing down can breakout of the previousminor swing pivot.so the breakout can be another buy entry point.
2b.the price consolidates for a longer period within a range.the breakout of this range gives a good buy entry point.
2c.the price zooms through the median line.it indicates a strong trend and price has a probability of reaching the upper median line parallel.so adding to positions can be done.
3.upper median line parallel is the resistance for the upmove.when price meets the umlh , one can book profits on long positions.
3a.on meeting the umlh, a red candle indicates the trend reversal.one should wait for a retest of the high, formation of a lower high, or breakdown of a minor swing retracement and go short.the first target will again be the price bar meeting the median line.
The price need not meet the umlh.the formations of swings at the upper channel and the breakdown into the lower channel will give the indication the trend is reversing.
So the next step is to look out for formations where we can short the stock / index.


At the beginning of any trend , we cannot assess the strength straightaway, so we need to enter trades with always the stoploss in mind.price patterns, breakouts ,volumes give hints about the trend direction.
In median line system, we look out for patterns like 123 pattern, breakouts of minor swings highs,minor swing lows to enter a trade with a minimum stoploss.
In the attached example chart, there is a minor retracement at 50 % level of retracement and breakout of the swing high gave a good buy entry point with the swing low as the stoploss.
When it reaches the median line, there will be a resistance and this point is the place to book part profits.the price patterns at the median line which have to be watched out for
1.reversal
2.consolidation
3.breakout

at the median line the trade decision will have to be taken based on the above.

Again coming back to the example chart, the price retraced from the median line and reversed again.the breakout of the swing high at the median line gave a second entry for buy position.
The price goes through a consolidation mode and after touching the lower median line parallel climbs up again.now the breakout of the previous sminor swing high gives another buy entry point.the meeting point of price bar at the median line will be the part profit booking target.

Some simple tips to follow would be :
Ascending pitchfork: Up trend , look out for buy trades ( trend trades)
descending pitchfork:down trend , look out for sell trades

dear kavima.
Thanks for starting this thread,and providing these charts and above all for introducing a trading system ,regarding which i was ,at least ,un aware,i will try to understand how this system work,after going through your varios posts thanks