Andrews developed his own method of predicting where price is going to go in the market. He said that his method will predict with 80% certainty where price is going to be. He originally called it the Median Line Method. One of the most popular Median Line Method tools were the reaction lines. These lines, when drawn on a chart, looked very similar to pitchforks to his students. So over time the name of this tool changed to the Pitchfork. And in more recent times they named it the Andrews Pitchfork, to credit the man who invented this amazing technical analysis technique.
DEFINITION of ‘Andrew’s Pitchfork’
A technical indicator that uses three parallel trendlines to identify possible levels of support and resistance. The trendlines are created by placing three points at the end of identified trends. This is usually achieved by placing the points in three consecutive peaks or troughs. Once the points have been placed, a straight line is drawn from the first point that intersects the midpoint of the other two.
Also known as “median line studies”.
How to draw an Andrews Pitchfork in 5 steps
Almost every piece of charting software has an Andrews Pitchfork tool, but to understand the inner workings I am going to walk you through the steps of how Alan H. Andrews and his students used to draw one of these pitchforks by hand.
This might be a little too technical in certain parts, but if you don’t understand something just read over it and look at the image. The image with the chart should explain enough for people that are not that familiar with the trading lingo.
You start out with a chart of a vehicle you want to trade. Make sure there are no other drawn lines or annotations on there for clarity. I took the ES chart in my example.
Looking at the chart I prepared we can see that the general trend is upward. This means that we also have to draw an upward trending Andrews Pitchfork. In the case of the up-trending Pitchfork we start looking for a Low point first, then the next point should be the next highest point and the last point on the chart should be the lowest point after that. I indicated the points with red circles.
The next step is to draw a line between the last two points we put on the chart. The center between these two points is called the midpoint or median. I drew in a blue line.
The most interesting of the steps. We draw a line from the first point on the chart through the midpoint and beyond. And immediately we see that the price of this vehicle is in trend with this line. This line is called the Median Line. And it is the backbone of the analysis technique. It is the new blue line spanning the entire width of the chart.
Now for the last step that will show that this tools looks like a pitchfork. We make two copies of the Median Line drawn in step 4 and place the beginnings of these two lines at the second and third point we drew on the chart. You should see something like the final pitchfork on the chart below. We call each of the two outer lines the Median Line Parallel. But more common is to just call them a parallel.
Analyzing the market with an Andrews Pitchfork
Now that we have an Andrews Pitchfork on our chart we can look and see if it is actually usable. We can’t just start trading with this. We have to make sure it works or ‘validated’ like most people say. So we have to find proof for this.
For validation that this pitchfork is working we have to look were the price is hitting either the Median Line or a Parallel and reversing off it. The more this happens, to more validated the pitchfork is. And the more confident you can be that this will happen again. Until the behavior of the price no longer interacts with that pitchfork. In the chart below I indicated the validation points with green arrows.
If the fork is validated, you can say with a certain risk factor in your favor, that price will be heading in a specific direction, from or towards the pitchfork lines.
There are many advanced Software like Motivewave and NinjaTrader which can be used to draw Andrews Pitchfork