Andrew’s Pitchfork is considered one of the most specific tools in online trading. That is why this technical indicator is not that well known and is rarely used by novice traders. However, it is a quick and easy way for traders to identify possible levels of support and resistance.
Working with Andrew’s Pitchfork is not difficult if you know some basic rules. Once you learn how to use it, it can become the basis of your trading strategy. It is created by placing three points at the end of previous trends and then drawing a line from the first point that runs through the midpoint of the other two points.
If you are client of Pocket Option Broker, you get access to Andrew’s Pitchfork in your Tools List. Read the article to learn more about how to set up and use this technical indicator to make money on trading electronic contracts.
Rules for Setting and Tuning the Indicator Up
If you look for Andrew’s Pitchfork in your Tools on the platform, find it in the menu of technical lines (not in the indicators).
Here is some basic advice:
Advice #1. Andrew’s Pitchfork is used exclusively on a chart with an uptrend or downtrend. It does not work sideways.
Advice #2. Before plotting the indicator, wait for a definite breakdown and a change (or strengthening) of the current trend. Only after such even it is possible to apply “pitchfork” on the chart.
Advice #3. After you click on the name of the tool, five parallel rays will appear on the main screen. The central ray should be placed starting at the last high or low (depending on the trend) and passing exactly in the middle of the breakout wave.
The reason this indicator is called a “pitchfork” is apparent from the shape on the chart. As you see on the chart, it is a downtrend on the chart that left its previous channel after the momentum. The central line of Andrews Pitchfork passes through the middle.
As a result, after the construction is completed, you will see a pitchfork, consisting of a central line and two parallel lines on each side.
Please note that the zones formed by the lines are colored green and red. It is important.
Trading with Andrew’s
The central line indicates the “fair price” of the asset, and the sides indicate the possible deviation. Andrews Pitchfork helps to trade on a rebound. Follow the strong signals of rebounds from the center line or from the extreme border of the green zone. In turn, reversals from the borders of the red zone are risky and should be used only with a confirming signal from another indicator or the Martingale system.
It is recommended to set the expiration time at least two bars. A rebound from a particular line must be confirmed (the next candle of the same color).
You can trade with Andrews on any timeframe. Signals from the indicator do not come often, but can bring profit in 80% of trades. That is why this tool is often used by professional traders.
Ultimately, there are no hard and fast rules about how to place your points and draw the channels; it’s a matter of judgment that can only come from experience.
In general, traders will purchase the asset when the price falls near the support of either the center trendline or the lowest trendline. Conversely, they’ll sell the asset when it approaches the resistance of either the center line or the highest trendline. Even though the center line can be used to identify areas where a security may find support or resistance, it is generally not as strong as the two outside lines. In practice, the levels identified by this indicator are very useful for identifying strategic positions.
