T2W Trading Community

In this article we look at preparation, techniques and money management for using integrated pitchfork analysis.

Spotting the Trade Opportunity
The process of low-risk high-probability spotting trades is very systematized for the experienced trader. He/she should visually scan the various choices of the operational time frame charts: 60-min, 30-min, 15-min and less frequently the 5-min chart. Our goal is to detect candidates representing low-risk high-probability trades. Once these opportunities revealed, we will employ different techniques with all the recommended disciplined rigour and patience. One of these is the zoom-and-retest technique, which is applied to a German Dax up-sloping failure. 

Finding the Optimal Set-Up
In this trade, we have spotted triple up-sloping failures on 60-min, 30-min and 15-min operational charts (refer to Figures 1, 2 and 3). We have chosen the 60-min chart (refer to Figure 4), as our optimal operational trading time frame, because of the better trend visualisation, longer running profit and less market noise. The risk might be slightly higher but the profit, like I said, much more consistent.

Time Frame Alignment
We have noted that the upper time frames (weekly and daily charts) are both in the same up-sloping direction, but ready to be corrected. Then, we have looked at the three lower time frames (60-, 30- and 15-min) to observe the local market movements, and to better pinpoint our entry. We notice that the corrections of the three up-sloping trends, on theses charts have already started. The 5169 level pivot is common for all the studied time frames: weekly, daily (both charts not shown), 60-min, 30-min and 15-min charts

The above 60-min chart illustrates the beginning of a correction with a big down-bar, closing right on the Center Line of the Action/Reaction lines set-up. The triple mirror pattern at the highest high (5169 level) is the guarantor of the reversal, beginning of a correction. It is highly probable that the down move will continue, at least a few bars, with intense momentum.

The above 30-min chart illustrates the beginning of a correction. The market travelled for a 6-bar duration on the lower median line, through a very narrow ascending channel, being halted cold at the 5169 resistance level. Then, it dropped with a big down-bar; very close to the external lower 150% Fibonacci line. The triple mirror pattern at the highest high is the guarantor of the reversal, beginning of a significant correction. It is highly probable that the down move will continue, at least for a few bars, with high-steamed momentum.