Andrews Pitchfork Indicator for TS
Developed by Alan Andrews, Andrews’ Pitchfork is a trend channel tool consisting of three lines. There is a median trend line in the center with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds. Reversals occur when prices break out of a Pitchfork channel.
BREAKING DOWN ‘Andrew’s Pitchfork’
The chart shown here makes it clear why this indicator is called a pitchfork. The first point drawn on the chart forms the handle, while the lines extending from the other two points will make up the prongs.
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One of the pitfalls of using technical analysis to gauge stock movement is that it often depends on whether a stock is trending. In the early stages of a trend, there is often a hotbed of contention, especially now in the erratic, often seemingly psychotic movement of stock prices, whether or not a stock is beginning a new trend. So there would be an advantage in using a system that gets you into the market after a trend has been established. The question then becomes, if you’ve missed the beginning of a trend, how long will the trend continue, and is it worth investing in a stock that’s already gone up or down significantly?
Andrews pitchforks and speed resistance lines are purported to solve this problem by creating support/resistance lines around a trending stock. Support and resistance lines are pretty much what they sound like: They mark areas that a stock price tends not to penetrate. If the area is below a stock price and the stock seems to bounce off the line rather than fall below it, then it’s a support line. If the line is above the current stock price and the price seems unable to rise above it, then it’s a resistance line. Often, when a stock rises above a resistance line, the resistance line becomes a support line, and vice versa.
Andrews pitchforks and speed resistance lines have a lot in common. Both give clear entry and exit points, and both are visual forms of analysis, simple to create and simple to use. But they generate their support/resistance lines using different theories and parameters, and they also appear quite different. Andrews pitchforks create parallel lines above and below a trending stock, while speed resistance lines radiate outward from a significant high or low point.
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