Andrews Pitchfork Mt4 Forex
What is Andrew's Pitchfork?
Andrew’s Pitchfork is a technical indicator that uses three parallel trend lines to identify possible levels of support and resistance as well as potential breakout and breakdown levels. The indicator, developed by Alan Andrews, uses trend lines that are created by selecting three points at the start of confirmed trends, higher or lower. This is achieved by placing the points at three consecutive peaks and troughs. Once the points are in place, a straight line that denotes the “median line” is drawn from the first point through the midpoint between the upper and lower points. Upper and lower trend lines are then drawn parallel to the median line.
Andrew’s Pitchfork Trading Strategy. It also catches trends with a channel. Essentially, Andrew’s Pitchfork is a tool for drawing price channels. While two lines surrounding price are usually enough to draw a channel, the Pitchfork has an extra line. It is the median line or the handle of the Pitchfork. What is the Andrews Pitchfork tool? The Andrew's Pitchfork can be accessed in the MT4 platform by clicking on Insert> and selecting Andrew's Pitchfork. Insert> and selecting Andrew's Pitchfork. The Andrews pitchfork tool or median line comprises of trend lines that are drawn connecting three price points. Swing high/Swing. Invented by and named after renowned educator Dr Alan H. Andrews, the technical indicator known as Andrew's pitchfork can be used by traders to establish profitable opportunities and swing. The trader is able to isolate great setups while weeding out the sometimes choppier price action in the forex markets that may increase his or her losses.
Andrew’s Pitchfork also uses trigger lines, which are trend lines that originate from point one (median line inception price) and intersect with the other points. A lower trigger line connects points one and three, sloping upward on a rising pitchfork. An upper trigger line joins point one and two, sloping downward on a falling pitchfork. Trading signals generated by the trigger lines typically occur well after price breaks the pitchfork’s upper or lower trend line. Breakouts above the upper trigger line suggest further upside, while breakdowns below the lower trigger line predict further downside.
Key Takeaways
- Higher and lower trend lines denote support and resistance.
- Confirm Pitchfork breakouts and breakdowns with other technical indicators.
How to Calculate Andrew’s Pitchfork
Andrew's Pitchfork can be easily applied to price charts without a specialized drawing tool.
- Point 1: starting point of uptrend or downtrend.
- Points 2 and 3: reaction high and reaction low in the uptrend or downtrend.
- Point 1 = starting point of median trend line.
- Distance between Points 2 and 3 = channel width.
- Draw and extend a trend line from Point 1 through the midpoint of Points 2 and 3.
- Draw and extend trend lines from Points 2 and 3 parallel with the median trend line.
- Change Pitchfork slope by changing Point 1.
What Does Andrew's Pitchfork Tell You?
Support and Resistance (Trading Ranges): Traders could enter a long position when the price of a security reaches the bottom trend line of the indicator. Conversely, a short position might be undertaken when the price hits the upper trend line. Traders may consider booking partial or all profits when the security's price reaches the opposite side of the pitchfork. Before entering a position, traders should ensure that support and resistance is stalling at these levels. Price should reach the median trend line frequently when a security is trending and, when that doesn’t happen, it may indicate an acceleration in the trend.
Breakouts and Breakdowns (Trending Markets): Andrew’s Pitchfork can be used to trade breakouts above the upper trend line and breakdowns below the lower trend line. Traders using this bilateral strategy should be cautious of head fakes and look at other indicators to gauge the strength or weakness of the breakout or breakdown. The on-balance volume (OBV) accumulation-distribution indicator is a good choice for evaluating volume that accompanies breakouts and breakdowns.
Limitations of Using Andrew’s Pitchfork
Keep in mind that selecting the most reliable three points takes skill and experience, which is vital because the indicator’s effectiveness depends on those points. Traders and investors can optimize this task by experimenting with different reactionary highs and lows, constructing and reconstructing the indicator to identify the most effective price points.
(To learn more, see: Make Sharp Trades Using Andrew’s Pitchfork.)
The Andrew's Pitchfork indicator is a tool used for trend trading and also to predict market reversals.
It helps you identify a channel in which an asset is likely to trade while it is trending up or down. Traders use it to predict when an asset's direction is about to change.
Andrew’s Pitchfork also alerts you to market corrections that you can use to time your entry to a trade.
The Andrew’s Pitchfork indicator uses three parallel lines to indicate possible support and resistance levels for an asset. They are constructed from three consecutive highs or lows on a chart. For an uptrend, the pitchfork is constructed from a low and high and then a low in that order. For a down trend, the pitchfork is constructed from a high, a low and then a high in that order.
The screenshot below shows what the Andrew's Pitchfork indicator looks like on a chart – you can see the highs and lows used to draw the channel:
Constructing the Andrew's Pitchfork on a chart
To plot Andrew’s Pitchfork on a chart, first look for three consecutive big highs or lows in the asset's price.
These key points are highlighted in the chart below:
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Mark these so-called pivot or turning points on the chart, then draw a straight line that starts from the first point and travels exactly through the middle of the following two pivot points, as the following chart shows:This forms the indicator’s central or ‘median’ line and resembles the handle on a pitchfork – hence the indicator’s name.
This forms the indicator’s central or ‘median’ line and resembles the handle on a pitchfork – hence the indicator’s name.
Then, draw two other lines that start from the second and third pivot points and run parallel with the median line. These form the pitchfork’s prongs.
The image below shows how the Andrew’s Pitchfork indicator appears on charts when applied to an asset's price:
Plotting the Andrew’s Pitchfork indicator can be tricky, not least because identifying significant highs and lows in an asset's price is subjective.
However, once plotted, the indicator is fairly simple to use and most trading platforms help traders bypass the plotting process anyway by providing the indicator within their suites of tools.
Price will gravitate towards the central line and bounce off the outside lines
The idea behind the Andrew’s Pitchfork indicator is that as price moves it will tend to gravitate towards the central line in the pitchfork and bounce off the second and third lines.
When looking to go long on an asset, or buy it, find a key low in its price, followed by a key high and finally another key low in consecutive order. You can then look for a long entry on the lower boundary of the channel.
- Key low price
- Key high price
- Key low price
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1 > Possible entry off of the lower boundary of the channel
When looking to go short on an asset, or sell, find a key high in its price, followed by a key low and finally another key high. You can then look for a short entry on the upper boundary of the channel as shown below:
1> Possible short entry
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The indicator is best used in trending markets and on the medium-term to longer time frames.
Summary
In this article you have learned ..
- .. the Andrew's Pitchfork helps identify channels to predict price reversals.
- .. it is plotted around three consecutive key highs or lows in a price.
- .. it features three parallel lines that indicate support and resistance levels.
- .. as price moves it tends to gravitate towards the central line in the pitchfork and bounce off the outer lines.
- .. when looking to go long on an asset, find a key low in the price, followed by a key high and then another key low in consecutive order.
- .. when looking to go short on an asset, find a key high in the price, followed by a key low and another key high.
- .. it can be tricky to plot the Andrew's Pitchfork but many trading platforms include it in their suite of tools.
- .. the Andrew's Pitchfork indicator is best used in trending markets.
- .. it works best with medium to long time frames.
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