Once this is done, draw and extend trend lines from points 2 and 3 parallel with the median trend line drawn in step 3.At this point, draw and extend a trend line from point 1 through the midpoint of points 2 and 3.
The distance between points 2 and 3 represents the channel width.Point 1 will be your starting point for the median trend line.Points two and three will be drawn at the pivot points (the reaction highs and lows of the uptrend/downtrend).The trend can either be an uptrend or a downtrend. Let’s examine seven simple steps to draw Andrews’ Pitchfork yourself. You do not need any advanced drawing tools to plot Andrews’ Pitchfork on a price chart. You would then draw a line from the first point through the midpoint of the other two points. The pattern uses three parallel lines created with three points at the end of a previous trend. This is a fundamental trading strategy using the Andrews’ Pitchfork indicator.įurther down on this post, we will examine a more sophisticated approach to trading this indicator in more depth.ĭrawing Andrews’ Pitchfork on a price chart is fairly straightforward. Since you know that the price will generally retrace towards the median line, you can enter long or short positions when the price moves away from this median line. The general approach to trading with this pitchfork indicator is found in these wild price fluctuations. Wild price fluctuations could account for the remaining 20%. Andrews concluded that the price of a security would gravitate toward the median line 80% of the time. If you examine the chart above, you will see a central “median” line running through the center of the pitchfork. You can see an example of Andrews’ Pitchfork below. It was developed by Alan Andrews and is described as a pitchfork due to the pattern that its price movements make on a price chart. The Andrews’ Pitchfork is a technical indicator used to identify support and resistance lines and highlight potential breakout and breakdown levels.
0 kommentar(er)
