This nifty little technical indicator was developed by Dr. Alan Andrews and is used by pro forex traders to uncover profitable swing trades in the Forex currency markets. Although it can be used to pinpoint the longer term cycles affecting the Forex market as a whole, it is mostly used as a guide for trend identification and finding strong support and resistance zones on the chart. In this article we will explain this indicator, why it works, and show you how you can employ it to further analyze your Forex trades.
The Andrew’s Pitchfork indicator is available on many of the available charting packages open to you, but you can just as easily learn to draw Andrew’s pitchfork lines (often referred to as “median lines”) on the charts yourself in the same way you draw simple trend lines. The Andrew’s Pitchfork indicator consists of two major support/resistance lines with a middle line dividing the two. Taken together, the three lines make up the tines of a pitchfork.

Dr. Andrews believed that the Forex pair price will regularly gravitate toward the median line, and that 80% of the time the price will stick close to the middle tine of the fork. The other 20% of the time price will fluctuate wildly and travel north or south of the median line. No matter what happens, the overall trend whether it be up or down will most likely remain intact and the future up or down trend will be predictable.

If supply and demand dynamics change so that prices move outside the bounds of the pitchfork, then we can say that the prevailing trend itself has changed. It is these situations that we are hoping for as they provide the very best profit opportunities. In this way we are using the Andrew’s Pitchfork to establish a prevailing trend along with the bounds that represent limits that confirm that price has broken out or broken down. When that happens we enter the market accordingly.

To apply the pitchforks, you must first identify a single high or low that has occurred sometime in the past on your chart. It does not matter where, but you should choose the most profound high or low point that you can easily see. The very first point on the chart, or “pivot” as they are called, will be placed at this high or low point you have chosen. Label this point on the chart as “Point A”.

Once that is done you need to identify both a high point and a low point to the right (later in time) of Point A. This is likely be a price move that was counter to the move up or down that gave you your Point A. The further apart these two new points are, the wider your pitchfork will be. Once you have established these two points label the high point “B”, and the lower one “C”. You will then have three points on your chart labeled “A”, “B”, and “C”.

Next draw trend lines connecting point “C” and the lowest lows you can see on your chart. Do the same with point “B” connecting it with the highest highs on the forex chart you see going forward in time. You will then have created a channel which should consist of somewhat parallel lines. Be advised that if “Point A” which was chosen by you to be a low point, then your channel should describe an uptrend. The opposite would be true if you have made “Point A” a high point.

The handle of your pitchfork will be formed by drawing a trend line that connects “Point A” to a distant point in the future being careful to make sure that this line essentially lies between the two other lines. When constructed, your pitchfork will consist of two lines representing support and resistance and a median line cutting directly between them. See Figure 1.

Figure 1.

When the pitchfork is drawn you can either trade within the bounds of the channel or wait for breakouts to occur to the upside or downside of your channel. Price action will either respect these support and resistance lines and bounce off of them giving you good range trading possibilities, or it will break out giving you a nice long ride up or down where there is not much support or resistance to stand in your way!