Andrew’s Pitchfork is a trend channel tool developed by the Alan Andrews comprising of three lines. A median trend tool is present in the center along with two parallel as well as equidistant trendy lines on both the sides of the center line. In fact, these lines are designed by choosing three points, and usually, it is based on the reaction lows or highs moving from left to right direction on the chart. Along with the normal trend channels and lines, the presence of trendy outside lines also marks up the potential support as well as resistance areas.
The points used for drawing the line are completely based on the reaction lows as well as reaction highs. It is also referred to as pivot points.
Andrew’s Pitchfork is used in a number of ways similar to that of traditional channels. It includes reversal trend lines as well as support resistance. Besides, these standard techniques the trigger lines can also be used as additional support areas, and it depends on the line connecting to the first point until the peak of the third point. These points are pretty much useful when the breakout occurs from Andrew’s Pitchfork till down the road.
Common strategies used under Andrew’s Pitchfork
- Buying the bounce
Many online traders purchase the product when the price hit the bottom of the channel and again sell it when its costs are on the top of the channel in order to get it profited from the difference. In such a scenario, it’s quite important to wait for the confirmation that the cost is replying to these levels.
- Buying the Break
A number of online traders purchase when the costs breakout from the top of the channel or else sell it when the costs breakdown from the channel bottom. In such cases, it’s essential to look out for a clean and clear break to avoid any sort of false breakdowns.
Likewise, there are plenty of strategies which can be employed. It’s actually the key value of the indicator is responsible for predicting when the costs are likely to support and resistance and also when a breakdown occurs. On the other hand, it can be useful in a number of different markets using different strategies.
Obviously, there are certain limitations which the trader should consider while using this indicator. Choosing the three initial points is indeed a very creative activity. Being technical indicators, there are chances of false breakouts, and thus, it becomes important to use the variety of tools rather than depending on single tools.
The Bottom line
Andrew’s Pitchfork is indeed a great technical indicator for the current day online traders while determining the support areas and resistance. It is not perfect in every scenario; this indicator provides a perfect indication regarding where actually the costs are headed. The only issue with this technique is, picking three points requires experience to master. Traders should also be sure to use the indicator as to the only piece instead of depending upon it exclusively.