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Mikula Forecasting
Company: Trading Strategy #5 Pitchfork
Setups.
====================
Written by: Patrick Mikula CTA
Copyright (c)2003-06 by Patrick Mikula All Rights Reserved.
(Please to not copy or foreword this article).
Mikula Forecasting Company
P.O. Box 152672
Austin, TX 78715-2672
USA
www.MikulaForecasting.com
support@MikulaForecasting.com
====================
Setups With The MarketWarrior
Pitchfork.
First Setup:
In this article you will see four current setups which can
be used with the Pitchfork. The Pitchfork is a trendline
tool that can be used to judge the strength of market cycles
and pivots to find good swing trades. In the first setup
seen below the Pitchfork is applied to the stock Comcast
symbol CMSCK on a weekly chart. In this example there are
two things which shows the market is making a very strong
swing bottom and it is time to buy the market. First at
point A the price moves down toward the median line but
failed to reach it. When the market moved down toward the
Median Line but fails to reach the Median Line it is a sign
of strength. Second, notice in the subgraph the Moving
Average Oscillator has been applied. The bottom in the price
at point A occurred when the Moving Average Oscillator held
above zero at point B. When a bottom forms in the price and
the Moving Average Oscillator stays above zero it is a
bullish sign. These two indications together tell us that
this stock is forming a strong bottom and we should buy the
up swing.
Second Setup:
The chart below shows a pitchfork applied to the Euro
Currency. The price has moved up within the boundaries of
the upper and lower Parallel Lines. In a situation like this
when the price stays between the upper and lower parallel
lines for an extended period of time the price reversals
often occur when the price finally reached the upper
parallel line. The price of the Euro-Currency is finally
reaching the Pitchfork upper parallel line so we would be
watching this market very closely over the next several bars
for a swing top to form on the upper parallel line.
Third Setup:
On the chart below the Pitchfork has been applied to a Wheat
futures contract. On this chart you can see one Reaction
Line which is part of the Super-Pitchfork. It is a very
common setup to see the market make a reversal right on top
of the intersection of a Pitchfork line and a Reaction Line.
On the chart below there is circle where the Median Line and
the Reaction Line have crossed. This is point A. Notice that
at Point A the market made a swing top and the fell below
the lower parallel line. It is very common to see a market
make a pivot on Super-Pitchfork line intersections and then
fall or rise to the next significant line in the
Super-Pitchfork.
MORE:
To see the fourth and final Pitchfork setup in this
article see the version of this article on the
MarketWarrior
owners page.
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Mikula
Forecasting Company: Trading Strategy #5