DEFINITION of 'Andrew's Pitchfork'

Andrew’s Pitchfork is a technical indicator that uses three parallel trendlines to identify possible levels of support and resistance. The indicator, developed by Alan Andrews, uses trendlines that are created by selecting three points at the end of identified trends. This is achieved by placing the points at three consecutive peaks or troughs. Once the points are in place, a straight line, referred to as the “median line,” is drawn from the first point that intersects the midpoint between the upper and lower trendlines. The upper and lower trendlines run parallel to the median line.

The chart below shows 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 make up the prongs:

Image depicting Andrew's Pitchfork indicator.


BREAKING DOWN 'Andrew's Pitchfork'

Andrew’s Pitchfork also uses trigger lines, which are trendlines that originate from point one and intersect with the other points. A lower trigger line connects point one and three and slopes upward on a rising pitchfork. An upper trigger line joins point one and two and slopes downward on a falling pitchfork. Trading signals generated from the trigger lines typically occur well after price breaks the pitchfork’s upper or lower trendline. Breakouts above the upper trigger line suggest further upside, while breakdowns below the lower trigger line indicate a move lower.

Trading Andrew’s Pitchfork

Support and Resistance: Traders could enter a long position when the price of a security reaches the bottom trendline of the indicator. Conversely, when the price hits the upper trendline, a short position might be taken. Traders could book profits when the security's price reaches the opposite side of the pitchfork. Before entering a position, traders should ensure support and resistance is holding at these levels. Price should reach the median line regularly when a security is trending; failure to do so may indicate underlying weakness and an impending reversal.

Breakouts: The Andrew’s Pitchfork can be used to trade breakouts above the upper trendline and breakdowns below the lower trendline. Traders using this strategy should be cautious of head-fake moves and use other indicators to gauge the strength of the breakout or breakdown, such as looking for increased volume to accompany the move.

Limitations of Andrew’s Pitchfork

Subjective: Selecting the three points used to create the Andrew’s Pitchfork is subjective and takes practice. The effectiveness of the indicator depends on the points selected. Traders can combat this by experimenting with different reactionary highs and lows when constructing the indicator to find the most effective price points.

(To learn more, see: Make Sharp Trades Using Andrew’s Pitchfork.)

  1. Trendline

    A line that is drawn over pivot highs or under pivot lows to ...
  2. Triangle

    A triangle is a technical chart pattern created by drawing trendlines ...
  3. Breakdown

    A breakdown is a price movement through an identified level of ...
  4. Breakout

    A price movement through an identified level of support or resistance, ...
  5. Ascending Channel

    An ascending channel is the price action contained between upward ...
  6. Trending Market

    A trending market is a market that is trending in a specific ...
Related Articles
  1. Investing

    The Utility Of Trendlines

    Trendlines give an investor a good idea of the direction an investment might move in. Discover how to make them work for your portfolio.
  2. Trading

    Trending Stocks Still Giving Buy Signals (XRS, TSM)

    These upward trending stocks are near entry points right now.
  3. Trading

    These Stocks Poised For Upside After a Pullback

    Amidst an uptrend, these stocks are flashing buy signals following a recent pullback.
  4. Trading

    Stocks Move Lower Amid Rising Risk

    Political risks and trade concerns sent most major U.S. indexes lower over the past week, although small caps posted slight gains.
  5. Trading

    These Stocks are Trending Higher (CNI, MU, SIX)

    These stocks are in uptrends and trading near trendline support, offering a potential buying opportunity.(CNI, MU, SIX)
  6. Trading

    Interest Rates Rise and Tech Underperforms This Week

    Weekly technical summary of the major U.S. indexes.
  7. Trading

    Introduction to Technical Analysis Price Patterns

    How to recognize price patterns that are key to technical analysis.
  1. What are the main advantages of using Moving Averages (MA)?

    See why moving averages have proven to be advantageous for traders and analysts and useful when applied to price charts and ... Read Answer >>
  2. What are the best technical indicators to complement the Exponential Moving Average ...

    Utilize additional technical indicators to complement and improve a basic trading strategy that relies on exponential moving ... Read Answer >>
  3. How do I identify a stock that is under consolidation?

    Discover the three major characteristics stocks or securities exhibit when they are trading under a period of price consolidation. Read Answer >>
  4. How do I start using technical analysis?

    Technical analysis is a method of analyzing securities by evaluating current and historical price and/or volume activity. ... Read Answer >>
  5. What indicators help define a bull market?

    Learn about a number of various technical indicators traders and analysts use to define and confirm the existence of a bull ... Read Answer >>
  6. How do traders and analyst create profitable Swing Trading strategies in forex?

    Learn how to create a profitable swing trading strategy in the forex market using price channels on bullish, bearish and ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center