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Andrews Pitchfork

Andrews pitchfork is a study using trendlines.  A basic understanding of trendlines and support/resistance levels is appropriate when finding application and interpretation using Andrews Pitchfork's.  In constructing the study, starting points are chosen.  The first is a major peak or trough on the left side of the chart display.  The second and third starting points are chosen to be a major peak and a major trough to the right of the first point.
After all starting points have been decided, draw a trendline from the first point (the most left) so that it passes directly between the right most points.  This line is called the handle of the pitchfork.  The second and third trend lines are drawn beginning at the starting points and parallel to the handle.  Dr. Andrews suggested that prices make it to the median line (or handle) about 80% of the time while the price trend is in place.  This means that while the basic long term price trend remains intact, Dr. Andrews believed that the smaller trends in price would gravitate toward the median line while the larger price trend remained in tact.

When that does not occur, it may be evidence that a reversal in the larger price trend may be in progress or provides evidence of a stronger bias at work in market.  When price fails to make it to the medial line from either side, it is often an expression of the relative enthusiasm of buyers and sellers and may predict the next major direction of prices.  If prices fail to reach the median line while above the median line, it is a bullish and failing to reach the median line from below is bearish.

 

Andrews Pitchfork charting example

Look for validation of support and resistance to help identify if penetration of one of the lines or levels is significant.  A reversal or continuation of a trend is often the resolution of a breakout of prices from a trading range or pattern.  Basic support and resistance principles indicate that when price penetrates a previously validated support line, the line then becomes a resistance level.  Similarly when price rises above a validated resistance level, the level then acts as a support zone while prices remain above it.  It is a good idea to watch volume changes when price is approaching a support or resistance level.  Volume will often give indication of the relative enthusiasm behind the current movement.

Andrews pitchfork charting example

 

 

 

 


 





 

 

 

 

 

 

 

 

 

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