I received an email over the weekend asking me to have a quick look at the CADJPY chart on a 20 minute basis. Although this is not one of the dozen or so pairs that the Cross Pair Analysis service covers on a daily basis we do follow it intermittently and my charts are available to members to download whenever they wish.
Looking at the vehicle, there were two things that initially stood out to me and I have marked them on Chart 1. Firstly the ascending lows as shown by the thick green line and, secondly, the little push above purple horizontal resistance shown in the green circle. (The purple circle shows the point from which I measured this horizontal resistance.)
Remember that this is only a 20 minute chart and needs to be viewed in the context of larger timeframes. However, putting the two factors mentioned above together it was worth looking at the pair to see if we could find the ascending path of price that it was following.
Using the distinct A,B and C pivots I drew the Modified Schiff pitchfork shown in Chart 2. To draw this particular type of pitchfork we move the point of origin 50% of the distance between the A pivot and the B pivot both in terms of time and price. This gives us an angle of ascent less steep than that of an Andrews’ pitchfork and in this case to my mind better defines the move that we are seeing.
Of course we need to look to validate the pitchfork – to prove that it is indeed showing us the all-important path of price – and we do this by looking for activity along the angle of the fork. On this occasion I noted the circled areas of support along the Median Line and at the Lower Quartile as well as the touch and rejection at the Outer Quartile on April 16th. I am not bothered that price moves in or out of the strict confines of the fork itself – I am looking to see whether I have successfully defined the movement of price by means of the lines drawn.
The continued action along the lines of the fork as shown by the red arrows leads me to think that this has been done. The down arrows show resistance in the line of the fork at the Upper Parallel and the up arrows show support along the Median Line. We appear to be currently moving in a channel defined by the green lines and I will continue to watch this to see whether trend weakens or strengthens along this defined path.
Please remember that this is only a 20 min chart, but the principles that I have tried to apply here can be used across all timeframes and all vehicles. The Cross Pair Analysis uses Median Line Analysis to cover a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and in detail via 240, 60 and 20 min ones.
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