A channel technique developed by Dr. Alan Andrews that uses three parallel trendlines to show areas of support and resistance. The three parallel lines are created from three consecutive major peaks or troughs.
Here is an example of an Andrew’s Pitchfork during an uptrend. Point A rallies to Point B, then retraces to Point C, then resumes its uptrend.
First find the most recent low, which is Point A. This is where the middle tine or median line will begin. Then find the highest move made from Point A. which is Point B. The next point is found by looking for the lowest retracement move from Point B, which is Point C.
The pitchfork shows continuous points of support and resistance. Generally, one would sell when price rises to upper tine, which is line B, and take profit when price reaches the middle tine, which is line A. One would also buy if price falls to the lower tine, which is line C and take profit when it rises back to the middle tine, line A.
The Andrew’s Pitchfork tool allows traders to trade channels when the market is trending.« Back to Forexpedia Index