Welcome to the new Tradimo learning platform. If you come from the previous version of Tradimo, you need to register again. Apologies for the inconvenience

Welcome to Tradimo! Here is our special offer for new users: Buy your first course now and get 10% off! 

0:00/4:22

Andrew´s Pitchfork indicator

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 is used to identify a channel in which an asset's price could trade while it is trending up or down, and to predict when an asset is about to change direction or experience a correction.

 

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:

The Andrew's Pitchfork is made up of three parallel lines that are plotted using three consecutive major highs or lows in the price.

 

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.

Identifying key highs and lows in a price is subjective. This makes plotting the Andrew's Pitchfork difficult. Fortunately, most trading platforms will do this for you.

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.

  1. Key low price
  2. Key high price
  3. Key low price

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. Key high price
  2. Key low price
  3. Key high price

1> Possible short entry

 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.