Andrew's Pitchfork indicator

Before reading this lesson you should have previously read through:

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The Andrew's Pitchfork indicator is a tool used for trend trading and also to predict market reversals.

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.

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:

Andrewspitchfork1

Constructing the Andrew's Pitchfork on a chart

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

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:

AP screenshot 2

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:

Andrews Pitchfork 5

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:

AP screenshot 1
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.

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.

You can practice how to draw Andrew's Pitchfork channels trend lines in the following exercises:
Exercise 1: Find the Andrew's Pitchfork channel Show exercise
Exercise 2: Find the Andrew's Pitchfork channel Show exercise

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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.

The image below shows how this appears on a chart:

Andrews Pitchfork long entry

number_1 Key low price
number_2 Key high price
number_3Key low price
el1 Possible entry off of the lower boundary of the channel

You can practice identifying trading opportunities using Andrew's Pitchfork in the exercise below.


Exercise 3: Find the long opportunity in this Andrew's Pitchfork channel Show exercise

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:

Andrews Pitchfork short entry

number_1 Key high price
number_2 Key low price
number_3 Key high price
es1 Possible short entry

The indicator is best used in trending markets and on the medium-term to longer time frames.

You can practice identifying trading opportunities using Andrew's Pitchfork in the exercise below:

Exercise 4: Find the short opportunity in this Andrew's Pitchfork channel Show exercise

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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