Lecture Notes: Gap Median Line in Pitchfork Analysis

Introduction

• Gap median lines in pitchfork analysis use similar logic to traditional pitchforks.
• The starting anchor point is chosen at a gap.
• Important to observe how price reacts to main and median lines for predicting future market movements.

Drawing a Gap Median Line

• Utilize the lower point of an opening gap and two major pivots from the first significant swing after the gap.
• The median line acts as a symmetry axis.
• If the price does not reach upper/lower parallel lines, the median line can still be significant.

Market Position Strategies

• Long Position: No need to worry about reversal until price leaves the lower parallel line.

  • A downward gap may signal reversal, especially with divergence between price and RSI indicator.
  • Consider closing position if reversal signals are strong.

• Short Position: Draw a channel and wait for breakout signal.

  • Breakout of trading range presents selling opportunities.
  • Use lower trigger line for take profit in bear market environments.

Patterns and Indicators

• Marubazu Candle: Signals potential continuation in price momentum.
• Head and Shoulders Pattern: Suggests selling pressure.
• Broadening Wedge: Recognize oscillatory movement around lines for shift in market sentiment.

Fibonacci and Warning Lines

• Use Fibonacci retracement levels to identify potential low points.
• Warning lines can act as barriers or triggers for stop-loss orders.

Specific Examples

• Example of price behavior around a gap median line showing divergence between price and indicators.
• An occurrence of a morning star pattern after divergence signals a potential market bottom.

Strategy for Exiting the Market

• Draw another pitchfork to encompass market and use upper parallel line as take profit level.
• Price may form another pattern (e.g., morning star) when breaking through warning lines.

Conclusion

• Confirm reversals with candlestick patterns and indicator divergences.
• Use pitchfork lines and patterns to manage entry and exit points effectively.
• Engage with community for questions and shared experiences.