Andrew Pitchfork Indicator
- The Andrew pitchfork is a technical indicator used to analyse the stock market.
- It consists of three parallel lines along the trend which can be used to identify the support level, resistance level and the breakout price.
- These lines are drawn by placing points at three consecutive peaks and troughs.
- Using the points at three locations, mark the mid points at the same place and join them to get the midline.
- Draw two parallel lines, one above and one below the midline to get the upper and lower lines which represent the support and resistance level.
- Before entering the trade, traders should check that the price is stalling between the support and the resistance lines.
- Also, the price should continuously cross the median line to ensure the upward or downward trend. If it doesn’t happen, it indicates that there is an acceleration in the trend and a steep rally is seen.
- If the stock trades between the lines, traders can enter the market and initiate their long position if there is a bullish rally and a short position if there is a bearish rally.
- Few traders can earn quick profits by initiating short positions when the price reaches the resistance level and a long position when the price reaches the support level.
- Often Andrew’s pitchfork indicator is used with few other indicators like the on-balance volume (OBV) indicator to identify the strength of the trend.
- The main limitation of this indicator is that it depends solely on the three points marked at the beginning. So, if the trader is inexperienced, he might mark a few incorrect points and the indicator leads to false results. Hence, using Andrew’s pitchfork indicator requires experience in marking the points.
