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Supporting Tools
Explanation
So far we have three different trading methods here: PF+Fib, PF-Angles, and the two Gann Squares. Used with the Trade Execution manual that came with this course you actually have three different trading systems. The two techniques in this section - PF Intersects and Fib-Fan Projection - are not meant to be used as trading systems. They are simply what we call "pivot finders" in that they give good predictions for coming pivots. But they should never be the basis of a trade by themselves.
Why are they here? Mainly as supporting methods for the other three methods. That is, if any of the other three are predicting a trend-change in the market, then if one or both of this sections techniques is also signaling a trend-change, you have substantially upped the odds that a pivot will form inside the predicted time-zone.
Additionally, in wide range markets the PF-Intersect technique often does a superb job of finding all the support-resistance levels for you. In strongly trending markets, the Fib-Fan Projection is one of the few techniques that works (along with GS24).What you may find in a strongly trending market is that one of the projected fan lines acts as dynamic support-resistance.
Pitchfork Intersects
Drawing Technique
This method involves drawing two pitchforks, using 4 consecutive pivots. The second pitchfork will share two of the preceding pitchforks pivots. Start by identifying 4 consecutive pivots, shown as A thru D below. Draw a Pitchfork by first connecting B to C then click on A.
I removed the Pitchfork drawn above for clarity. Now we'll draw the second pitchfork by connecting C to D and clicking on B.
Below are the two pitchforks together. I drew red vertical lines where the pitchfork lines intersect.
Market Type
The PF-Intersect works best in wide and medium range markets as it requires 4 clear pivots to draw. However, markets are in a wide-range most of the time so you will usually be able to use this method. In strong trending markets where it is possible to draw it, you'll find that the angle of ascent or descent of the PF lines is very steep, making it impractical to use. It works best on these market types:
Interpretation
This technique provides very good swing-point (or pivot-point) times, and respectable dynamic support-resistance levels. It requires four consecutive clear pivots within a maximum of 200 price bars, and is best applied in wide-range markets using any charting software that has the Pitchfork.
Below are the two pitchforks from the preceding Drawing page. The red vertical lines where the pitchfork lines intersect often mark trend-change points.
Below is another example.
Like most market geometry when you first see it, it looks confusing. This is a very simple technique though. When it's possible to find four consecutive clear pivots within 200 price bars this is a great technique.When drawn you may want to keep this on its own chart, not drawing the PF Angle lines on the same chart. If you're trading Forex, please try it on 240-minute charts of any major currency pair or on the Dollar Index.
Best Practice
This will enhance both the PF-Angles and PF-Intersect methods. I'm using a daily EurUsd chart to illustrate. What we want to see early on in a pitchfork is that it offers support or resistance. This can take the form of a pivot forming right on a pitchfork line, price congesting at one of the lines, or a trend being contained within two lines as in a trendline channel. The below image shows first a pivot and next congestion at the red circles.
Below we have the same green PF from above, and we've added the blue pitchfork which uses pivots 1, 2, and 3. We can see that the blue pitchfork defined a clear trend-channel for price early on. This gives us confidence that the intersects of these pitchforks lines will signal strong trend-changes. The red circle shows a strong trend reversal.
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