Bulkowski's Steelcase (SCS) Trading Quiz, Andrew's Pitchfork

What chart patterns can you find? Look for the following (if you find others, great!): 2 falling wedges, ascending broadening wedge, right-angled and descending broadening formation, ascending triangle, 2 symmetrical triangles, broadening top, double bottom.

Instead of going through a simulated trade, I thought I'd review Andrew's Pitchfork.

This is a hand drawn representation of Andrew's Pitchfork because my homebrew program doesn't copy the image correctly onto the clipboard.

Select 3 pivot or turning points: Use the weekly price chart to pick 2 major turns (a high point and corrective low, such as BC in the chart, if it were on the weekly scale) and transfer to the daily price chart. Select a third turn where the current trend originated (a previous low in a rising market or high in a declining market, A). Andrew used 3 consecutive turning points. All 3 points should be of similar magnitude, be at least 3 days apart (each) and make a T shape, such as the three turning points A, B, and C shown.

In an up trending market, a break of the lower line suggests support has been broken; in a down trending market, penetration of the upper channel line suggests a burst through resistance. Breaks above and below the channel lines produce changes in the short to intermediate term trend.

Expect market tops to occur at the middle line or between the middle line and the upper channel line and market bottoms to occur at the middle line or between the middle line and lower channel line. The median (center) line often serves as a place where price makes a temporary reversal. The price tends to return to the midpoint 80% of the time. Reversals at the median line are good places to enter, re-enter, or add to positions.

When prices form a pivot but don't reach the median (middle line A in this case) line, they often make up for it when they form the next turn by traveling even further in the opposite direction. At the start of a move, prices typically close beyond (either above or below) the median line. Draw new lines using the new turning point (where it just crossed the median line). If prices now fail to move beyond the new median line, expect a trend change.