My thoughts on the pitchfork (PS Lindfield and other doubters please read this and if you want to, provide a critique of what I write; thats the way we improve!)
Someone asked last week why peops on here like the p/f % too busy then but woke up at 5am this morn thinking about this so jotted a few thoughts down. These are just my ramblings and I share in case they might help someone (& they help clarify my thoughts)
What I like about the p/f.
Well as an opening statement let me say that I defs do NOT consider the p/f the panacea or the answer to all things s TA nor is it magic. The following are my thoughts based on drawing hundreds (probs thousands) of charts. Prior to being into TA (18 months or so ago) I had always had a bit of a theory that shares/markets had a FAIR VALUE (FV). The mathematical part of me had always planned to try and derive a formula based upon the hypothesis that the further price moved from FV the greater the force that was on it to return to FV; like s stretched spring that would bounce back to FV at some stage. (Always thought that the physics around spring theory might be useful but that was then?)
My thoughts on what constituted FV were not very developed but based around FA generally (PEs, divs, market share, profits etc). Long story short GFC changed my fundamental view forever (PUN INTENDED!) of the world. I DO NOT KNOW OF ONE FA (or economist) WHO PICKED THE GFC but I had heard lots of TA leading up to the GFC predicting the top of the market.
So welcome to TA. Why the fork? The more charts I looked at the more I saw that price retreated to about 50% from a recent run. Did not matter what time frame the run was in it just kept happening.
From the start of my TA I based my thoughts on a belief that the market and the resultant charts they produce are nothing more than a reflection of the collective (unconscious) actions of the market; a sort of ongoing repeat of various levels of greed and fear.
Started to see a bloke on here (T91) who just kept drawing these elegant looking charts with forks and he swore they worked so I had a play. mmmm median line me thought; remember that stuff about FV? Could a med line represent FV? 50% retraces mmmm remember all those 50% retraces? Maybe nothing more than a retreat from a res tyne to a med tyne OR maybe med tyne just captures that phenomenon take your pick.
I started to see some logic to the p/f. Some more random thoughts:
Retest Pattern: just helps confirm a line as a trend line and often a form of mini double top (or bot) where we are getting confirmation that the bears have won over bulls Fibonacci Link; obvious overlap for me with the50% fib (by the way fibs are the only "magicl" I have come across in TA; IMO they are truly spooky & took lots of time for my logical brain to accept them. But seen to many fib lines catch price to NOT accept them.)
Trigger line: sort of makes sense that a trend line connecting the handle and one end of a significant run will form a significant line doesn't it? They work!
Andrews theorys: so not only do we a have a set of lines with the fork that IMO has some logic in helping to frame price move but we have some simple theorys on what ifs; if we get a retest 80% of time we will get move to med tyne etc (other but google if interested) Now that has got to be worthwhile doesn?t it?
Trading Methods: Its taken me over a year to appreciate the teachings of Masters like T91 (grasshopper appreciates that he has been very patient) but just recently I have learnt the value of trading a "line"; whether it be a res, med or support; a proven line is a traders friend. I have written elsewhere about this but the line can increase your risk /reward ratio exponentially if brave enough. I am still a babe in the wood in this regard but I enjoy trading the lines; T91, 10c and the lads on SPX are the experts here! (Happy to explore this more if any interest.)
So not sure that helps anyone? But they are a few of my thoughts. No magic but a damn handy tool IMO. Happy charting and trading. g
