This method uses combination of Median lines, Trendlines Trendlines , Moving averages and Stochastics technical indicator to identify entry and exits. This is a discretionary method following the guidelines in which the tools can be used. To capture the maximum run r un of a price swing between Aim: To support zone and resistance zone.
Timeframe: 60 minor! "0 min chart for positional trades #$ min or! $ min chart for intraday trades
Tools: #.Median %ine set &.Trendlines &.Trendlines ' (orizontal (orizonta l support and resistance lines, )ownsloping and *psloping resistance and support lines ".Moving +verages +verages $ -M+, " -M+,$0 SM+ .Stochastic indicator with "$,"," settings
Explanation and role of tools in the method Median Line Set comprises of a median line M%! and two parallel lines to it called as *pper median line parallel *M%(! and %ower median line parallel %M%(!./n a price chart, three pivots are chosen where a signicant reversal in price has been completed. /f the three pivots are termed as #,&,and ", the median line is drawn from pivot # through the midpoint of a line connecting pivot & and ",and two parallel lines are drawn from 1ivot & and 1ivot " parallel to the median line. This the Median line Set. The Median line M%! is termed as a Magnet line which attracts price towards it.The *M%( is a resistance line and
the %M%( is a support line. Similar to properties of horizontal support 2 resistances, these lines act as boundaries where the price move runs out of energy in the channel and a price reversal is expected to occur. occur.
Trigger lines 3hen a line extends from pivot # through point & 2 pivot # through pivot ", these lines are termed triggerlines. Trigger Trigger lines dene a boundary which wh ich when violated indicates a reversal 2 change in momentum of price movement.
t o the *M%( Warning lines 3hen a line is drawn parallel to +4) %M%( at a distance e5ual to $0 range of range between pivot & and ", it is termed as a warning line. -5uidistant 3arning 3arning lines are drawn parallel to the *M%( and %M%( when price moves out of the 1itchfor72 median line set. The nature of the warning lines are the same as the *M%(2 %M%( in its support and an d resistance properties.
Trendlines + horizontal line which connects previous pivots where price has reversed, can give support 2 resistance when price approaches 2 meets it. + sloping line connecting a series of lows 2 highs is expected to give support and resistance when price approaches 2 meets it.
Support lines can become resistance lines when price moves down the support line and then climbs up retests the support zone and vice versa. 8luster of prices at a certain level also act as supports 2 resistances. 3hen price brea7s out of a trendline, it is an indication of change in behavior and reversal in trend. 3hen a brea7out occurs, price reverses and tends to retest the brea7out level. /f price retests and moves higher then the retest is a success and price will reverse direction.
Moving Averages
$0 SM+ is used as an overlay to dene the trend and maintain the position entered for a maximum time till it reverses conclusively. $-M+ 2 " -M+ crossovers are used to netune entries and exits at the turning points .
Stochastics ( 3533! Moment"m indicator used to identify overbought 2 oversold zones. 9oth Moving +verages and Stochastics follow price and will be a lagging indicator. indicator. The method uses u ses the these indicators to identify the general trend and to estimate when price is approaching overbought and oversold zones with relation to the previous swing.The con:uence of these with median lines dene high pro#a#ility entry $ exit points .
Median Line Trading %"idelines )r.+ndrew;s )r.+ndrew;s
nce a long or short is entered ,if price does not stall at the median line , it will tend to move upwards towards the *M%( for a long position and towards the %M%( for a short position 3hen price reaches the *M%( ? *pper median line from below, boo7 prots for buy trades or enter a short position.
3hen price reaches the %M%( ? %ower median line from above , boo7 prots for short trades , buy the mar7et or enter a long position. /f price bar action shows clues of resistance 2 support at the M% ? median line , then short 2 long positions can be entered and price move will be expected towards the %M%( 2 *M%(. 1rice moves within the channel will meet resistance and support at horizontal 2 sloping support 2 resistance lines. Minor M% sets can be drawn to estimate the smaller price moves.
Targets >nce position entry is decided, targets are identied at #. /mmediate Minor Swing high 2 Minor swing low above 2 below the price. &. $0 of range between pivot & and ".
3& 1rice meeting median line. This point can be calculated by drawing a line from pivot " with a slope same as the previous swing in the direction in which the new trade is being entered&('ote:This is an approximate estimate of the moveand price may not necessarily move in a straight line& The move ill #e expected to move in an "p $ don $ sideays se)"ence as and hen it meets intermediate donsloping $ "psloping resistance $ s"pport lines& The targets can extend f"rther don $ "p hen it starts moving sideays range and then #rea*s o"t&! . /f price moves 2 zooms through the M%, then the targets are extended towards the *M%(2 %M%( for an upmove 2 downmove.
Stops
The *M%( and %M%( are the boundaries of the expected price move. So the levels at these lines act as stops to positions entered close to them. The exact levels can also be identied above minor swing lows 2 highs or at horizontal support 2 resistance lines from previous price pivots. The trade is managed with having a trailing stoploss below recent minor lows 2 minor highs in a upmove2 downmove.
+is* reard ratio The ideal << ratio should be a minimum of # ",but ",but as it;s a discretionary system, the trader can dene the money management rules as per account size.
Adding to original position and part #oo*ing of position The decision to add 2 part boo7 positions is as per traders style. +ggressive style ' when one enters the full position in one point and 8onservative style ' when entering in stages. This also depends on the time period which one wants to hold the trade and the ris7 planned. %onger holding period will have pullbac7s when the prot curve may move up and down on the position and the trader;s mindset should be prepared it. The full position can be entered in the initial entry point and part boo7ing at target levels with trailing stoploss for balance. +dding to positions can be done when price brea7sout of a minor swing high 2 low. low.
The Set"p of the ,hart #.The 60 min chart is displayed.
@or intraday trades $ min charts can be used , but entering trades with the trend will be ideal to catch the longer swings and avoiding whipsaws in the shorter timeframe.! &.>verlay of $0 SM+ is done. $2 " -M+ optional. ".Stochastics indicator with "$,",", settings is used.
The Method Mar*ing the Sings Mar7 the pivot highs and lows of swings. This can be visually pic7ed out from the chart as the highest point when price is above $0 SM+ and the lowest point when w hen price is below $0 SM+. 8onnect the series of minor swings above and below the $0 SM+.+ series of higher highs and higher lows is an uptrend and vice versa. The trend is identied. + maAor median line set also called as 1itchfor7! is drawn with the maAor swings in line with the trend. /f the pivots are %ow, (igh, (igher low, the 1itchfor7 will be an upsloping 1itchfor7 and vice versa. So if the series of swings point to a downtrend, a downsloping pitchfor7 is drawn and if in an uptrend , an upsloping 1itchfor7 is drawn with suitable pivots. 3e;ll 3e;ll call this the Trend pitchfor*& /f the Median line channel is too wide , then smaller swings are used to draw consecutive 1itchfor7s to follow the price moves. The 1itchfor7 with the recent pivots will be the called the ,"rrent -itchfor*
Where is the price . 3here is the position of the price bar B/f above $0 SM+, then it is already in an uptrend 2 upswing and vice versa. The aim of the strategy is to identify the turning point of a swing from where a price reversal can ta7e place. 3e 3e have
to catch the lowest point when it is below $0 SM+ to ride an uptrend and vice versa .-ntry level with a minimum stoploss point is the goal . So if the price is below $0 SM+ , the loo7out is for a support level to enter a long position. )raw a downsloping 1itchfor7 with recent pivots.The high probability entry trigger zone will be a con:uence of #.The price meeting 2 near the median line &.The stochastics in oversold zone. ".8andlestic7 reversal formations li7e hammer, bullish engulng etc can be used for conrmation for entry zone.
When to enter. )raw a downsloping trendline from the pivot high of the developing current swing to the temporary low point named as temporary as it is not yet conrmed as low!./dentify a minor pullbac7 completed earlier in the current swing and draw a parallel to the downsloping trendline through the swing high of the pullbac7. +fter +fter price crosses this parallel line, enter a long position on the rst retracement . + $2" -M+ crossover can be used as additional conrmation. Stoploss will be the recent swing low from where the price has reversed. >nce price moves above $0 SM+, the temporary low is conrmed as a swing low, and a new upsloping 1itchfor7 can be drawn. The position is managed as it moves within this new pitchfor7.
Exits Targets Targets as mentioned earlier. earlier. These points can be used to part boo7 prots.
-osition ill #e held till price is ithin trend&ie Longs are held till price is a#ove 5/ SMA and shorts are held till #elo 5/ SMA& +ggressive style trading ? 1ositions can be part boo7ed at intermediate targets 2 at *M%(,%M%(,M%;s 2 at resistance lines 2 support lines and rentered on pullbac7s.
Example ,hart
