Andrews’ Pitchfork is a popular technical analysis tool used by traders to identify potential support and resistance levels and to project the likely path of a price trend. Named after Dr. Alan Andrews, who developed the method in the 1970s, this tool uses three significant pivot points—usually a high, a low, and a retracement point—to draw a median line and two parallel equidistant lines that form a channel resembling a pitchfork.

The construction of Andrews’ Pitchfork begins by selecting three key points on a chart: Point A (usually a significant low or high), Point B (the next opposite high or low), and Point C (a retracement or reaction point after B). The median line is drawn starting from Point A through the midpoint of Points B and C. From the median line, two parallel lines are drawn equidistant from it—one through Point B and the other through Point C. These lines create a channel that helps traders visualize the potential trajectory of the price.

Formula:
Median Line = Point A + 0.5 * (Point B + Point C – 2 * Point A)
Upper Parallel Line = Median Line + (Point B – Median Line)
Lower Parallel Line = Median Line + (Point C – Median Line)

The median line acts as a magnet, often attracting price action, while the upper and lower parallel lines serve as dynamic resistance and support levels. Traders use Andrews’ Pitchfork to anticipate where prices might reverse, continue, or consolidate within this channel.

A practical example can be seen in the EUR/USD currency pair during a trending period. Suppose the price makes a low at 1.1000 (Point A), then rises sharply to 1.1300 (Point B), and retraces to 1.1150 (Point C). Drawing the pitchfork from these points, a trader can observe how the median line projects a potential upward path for the price, with the upper and lower lines marking boundaries where the price might encounter resistance or support. If the price respects these lines, it can offer trading opportunities such as buying near the lower line or taking profits near the upper line.

One common misconception about Andrews’ Pitchfork is that it guarantees price will remain within the channel. While it often acts as a useful guide, prices can and do break out of the pitchfork lines, especially during volatile market conditions or fundamental news events. Relying solely on this tool without considering other indicators or market context may lead to false signals. Another mistake is poorly selecting the pivot points; since the pitchfork’s accuracy depends heavily on the choice of Points A, B, and C, incorrect identification can skew the channel and reduce its predictive power.

Traders often ask related questions such as “How to draw Andrews’ Pitchfork correctly?”, “What are the best pivot points for pitchfork?”, and “Can Andrews’ Pitchfork be used for day trading or only longer-term trends?” The answer is that while pitchforks are more commonly used in medium to longer-term trading due to the nature of identifying significant pivots, they can be applied in shorter time frames as well, provided the pivots are chosen carefully based on the timeframe and volatility.

In summary, Andrews’ Pitchfork is a versatile tool that offers a structured way to analyze trends and potential price channels. When combined with other technical indicators and sound risk management, it can enhance a trader’s ability to make informed decisions. However, like all trading tools, it is not foolproof and should be used as part of a broader trading strategy.