|
PureBytes Links
Trading Reference Links
|
Hello everybody
I need to understand implications of choosing appropriate anchor points for
drawing the Andrews Pitchfork as a S/R identification tool.
Attached gif has 3 indices with sample pitchforks for discussion:
1. Dow weekly; pitchfork anchored at the highest highs of 1997 and 1998; and
lowest low of the second half of 1997. Overlaid is
a/ a 21 period EMA, my choice of trend direction indicator.
b/ Fibo from Oct 28 97 low to July 20 98 High with look-forward
ret4racements.
c/ Yellow Pitchfork anchored on 2 nearest weekly highs and nearest weekly
low for 1998.
2. OEX daily, pitchfork anchored at the highest high and lowest low of the
most recent trading range (April-June 1998) ; and the latest highest high
(July 20 1998). Chart is overlaid with
a/ + and - 3.5% moving average bands to indicate trend continuation or
termination/support levels.
b/ 89 period EMA
c/ Fibo anchored at Oct 28 '97 Low and July 21 '98 High; with lookforward
retracements.
d/ Fibo anchored at Jun 5 '98 Low and Jul 20 '98 High with lookforward
retracements.
3. SPX Cash daily, yellow pitchfork anchored at June 10 trading range High,
June 16 trading range Low and July 20 Trend High.
Red pitchfork anchored at July 20 high and July 28 Low, midpoint chosen
arbitrarily. Chart overlaid with
a/ Horizontal blue line showing date of the first upcoming eclipse (I
understand these are inflection points)
b/ 21 EMA and 89 EMA, my trend direction indicator
c/ Fibo from June 16 low to July 20 High, with lookforward retracements.
While I've anchored pitchforks like this for the periods mentioned above,
I've found very little literature to guide me to their use as predictors or
attractors for price action (in the way MA bands or regression channels or
SEB Bands find use as price move attractors). I find that these do work as
price attractors if anchor points are chosen correctly.
Present market action on daily and weekly charts is at or near some obvious
levels of MA and Fibo support.
The Pitchforks on each of the 3 charts show a different story.
a. Dow weekly shows we have a long way to go before tremendous support is
found even though prices are presently tracking the middle line of the most
recent pitchfork, and are at present at the confluence of an MA, a Fibo and
the pitchfork middle line.
b. OEX Daily shows prices at confluence of pitchfork median and a Fibo
level, but below 21 period EMA and much above 89 MA/other Fibo supports.
c. SPX Daily shows 21 MA failure as in OEX, median pitchfork failure and
room to go before 89 EMA catches up. However, there is a Fibo retracement
giving the market a pause. SPX pitchfork anchors are different from OEX
pitchfork anchors, but median failure remains the same if same date anchors
are taken on SPX chart.
Question:
I recognize this has some significance, I don't know what; or how what you
see should be interpreted from a price-attractor point of view.
Other than observation value, I'm not using this for making trading
decisions until my understanding is complete.
I'd appreciate input for interpretation and/or reading material for the
same. If specific guidance can be given regarding choice of anchor points,
even better :)
Thank you.
Gitanshu
Attachment Converted: "c:\eudora\attach\Andrews 7-29-98.gif"
|