Lecture Notes on Pitchfork Strategy and Trigger Lines

Key Concepts

Trigger Line as Support/Resistance:
- Acts as a strong barrier causing price reversals.
- Not limited to support/resistance; also signals breakouts.
Breakout Signals:
- Bullish Pitchfork:
  - Sell signal when price fails to reach the median line and breaks the Lower Trigger Line (L-TL).
  - L-TL acts as both support and resistance.
- Bearish Pitchfork:
  - Buy signal when price fails to reach the median line and breaks the Upper Trigger Line (U-TL).
  - U-TL acts as both resistance and support.

Bitcoin Chart Example:
- Use three fractals, A, B, C, to draw a classic pitchfork.
- Price moved up from C, failed to touch median line, broke the lower parallel line.
- Breakout indicates potential L-TL breakout.
- Powerful bearish candle confirms going short.
- Stop loss above the latest fractal; profit targets at points C and A.
- Mirrors successful short strategy yielding profit.
Bearish Pitchfork Application:
- Similar setup with opposite trigger line roles.
- Price down from C, couldn't touch median line, broke upper parallel line.
- Bullish candle breakout signals going long.
- Stop loss below latest fractal; target at point A.

Slope of Trigger Line:
- Defined by pivot points A, B, and C.
- Shorter handle = smoother slope; long handle = steeper slope.
- Affects risk/reward ratio; shorter distance between median and trigger lines lowers trade risk.
Extension Technique:
- Draw pitchfork based on fractals, add warning lines.
- Extend lines left to check historical market reaction.
- Past reactions suggest future effectiveness, enhancing strategy reliability.

Bitcoin Chart Continued:
- Standard pitchfork drawn, warning lines extended.
- Historical price reactions validate pitchfork’s reliability.
- Pitchfork lines serve as a base for trading strategies.