Andrew’s Pitchfork is a technical indicator developed by Alan Andrews. This trading tool can be used to identify support and resistance lines as part of on overall trading strategy. It is typically used for trend trading and also to predict market reversals. The pitchfork consists of three points which form a price channel 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.
What is Andrew’s Pitchfork indicator?
Andrew’s Pitchfork is a tool with which you can effectively evaluate the direction of trends in the forex market and predict the breakthrough of existing patterns. The tool consists of three parallel trend lines built according to a specific algorithm, based on three points.
- The first point is set in the place where, in your opinion, the trend begins (the middle line will come from it). As a rule, this is a significant peak or trough in the chart. This line is the “central core of the pitchfork,” the median reflecting the average market price within the current trend.
- The second point should indicate a relevant high, fixed in time after starting the trend. This will be the beginning of the resistance line, the upper “tooth” of the Pitchfork.
- The third point indicates an important minimum, which in time should also come after starting the trend. This will be the beginning of the support line, the lower “tooth” of the Pitchfork.
How to use Andrew’s Pitchfork indicator?
In general, traders will buy a trading instrument when the price falls near the support of either the center trendline or the lowest trendline. On the contrary, traders may look to sell an asset when it approaches the resistance of either the center line or the highest trendline. Even though the center line can be used to identify areas where an instrument may find support or resistance, it is generally not considered as strong as the two outer lines. In practice, the levels identified by this indicator can also be very useful for identifying strategic positions in which to place stop-losses and take profits.
In general, the Andrew’s Pitchfork tool can be easily replaced with a classic equidistant channel. Given the fact that the tool is entirely subjective, it depends only on you how accurately you “marked the pitchfork indicator on recent market movements. Therefore, experienced specialists recommend practicing with this tool on history to better feel which reference points need to be put.
Andrew’s Pitchfork indicator trading strategy
This is a trend prediction system based Andrew’s Pitchfork indicator. Entrance to the market is carried out in the direction of the pitchfork indicator using moving averages or Stochastic Oscillator as additional filters. You can use any method of your choice, but experienced traders often combine multiple market analysis for more accurate entries.
- Trading instruments: currency pairs, indices, stocks, metals, cryptocurrencies, commodities
- Time frame: 1-hour and above
- Trading sessions: London, New York
- Andrew’s Pitchfork (default settings)
- 20 Simple Moving Average (SMA)
- Stochastic Oscillator (5,3,3, close)
Andrew’s Pitchfork buy setup
- The blue lines of the Pitchfork indicator are directed up.
- Price is above 20 SMA and Stochastic shows oversold conditions.
Andrew’s Pitchfork sell setup
- The blue lines of the Pitchfork indicator are directed down.
- Price is below 20 SMA and Stochastic shows overbought conditions.
- To get more trading signals, you can set a strategy template for all currency pairs and time frames.
- Signals can be confirmed on all time frames.
- If the lines of the Andrew’s Pitchfork indicator are directed horizontally, it is not recommended to open deals.
Andrew’s Pitchfork indicator conclusion
Andrew’s Pitchfork indicator is actually subjective and the reference points (peaks and valleys) chosen for the tool can vary from person to person. Therefore, there could be difference among the traders trading this tool.
The Andrew’s Pitchfork indicator is flexible to differing market conditions, thus can be used as part of a forex trend trading strategy and forex range trading strategy. However, notice that the Andrew’s Pitchfork indicator may lag like any other trading indicator and deliver false trading signals.
The methods of implementing Andrew’s Pitchfork into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.
Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.
If you would like to practice trading with the Andrew’s Pitchfork indicator, you can open an account with a forex broker and download a trading platform. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.