I sometimes like to use Andrew’s pitchforks on my charts, to help me to determine if we are coming close to a break point and I need to start paying more attention to a particular asset class, and I think we may have an interesting one on Bitcoin – take a look below.
For those unfamiliar with this tool….I have taken this from John Murphy’s Chart school……’ Andrews' Pitchfork is a trend channel tool consisting of three lines; a median trend line in the centre with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds; reversals occur when prices break out of a Pitchfork channel.
Sometimes the median line needs adjusting to establish a realistic slope. Pitchforks that are too steep will be easily broken. Pitchforks that are too flat will not capture the trend.
Pitchfork trend lines can provide support or resistance. In an uptrend, the lower trend line acts as support to define the overall trend, the upper trend line acts as resistance and the median line defines the strength of the trend. Prices should reach the median line on a regular basis during an uptrend. Failure to reach this line shows underlying weakness that could foreshadow a trend reversal.
The steepness of the Pitchfork channel depends on the placement of the three drawing points, particularly point 1, which is the start of the median line. Even though point one usually starts with a reaction high or low, it is sometimes necessary to adjust point 1 to ensure a realistic price channel. Unfortunately, there are no hard rules for point placement. Instead, chartists must use judgment and experience when drawing channels. This is where the subjective nature of technical analysis comes into play. As with most aspects of technical analysis, it is important to build experience by experimenting with Andrews' Pitchfork. Seeing what does or doesn't work first-hand is the only real way to master an indicator.’
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The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
For those unfamiliar with this tool….I have taken this from John Murphy’s Chart school……’ Andrews' Pitchfork is a trend channel tool consisting of three lines; a median trend line in the centre with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds; reversals occur when prices break out of a Pitchfork channel.
Sometimes the median line needs adjusting to establish a realistic slope. Pitchforks that are too steep will be easily broken. Pitchforks that are too flat will not capture the trend.
Pitchfork trend lines can provide support or resistance. In an uptrend, the lower trend line acts as support to define the overall trend, the upper trend line acts as resistance and the median line defines the strength of the trend. Prices should reach the median line on a regular basis during an uptrend. Failure to reach this line shows underlying weakness that could foreshadow a trend reversal.
The steepness of the Pitchfork channel depends on the placement of the three drawing points, particularly point 1, which is the start of the median line. Even though point one usually starts with a reaction high or low, it is sometimes necessary to adjust point 1 to ensure a realistic price channel. Unfortunately, there are no hard rules for point placement. Instead, chartists must use judgment and experience when drawing channels. This is where the subjective nature of technical analysis comes into play. As with most aspects of technical analysis, it is important to build experience by experimenting with Andrews' Pitchfork. Seeing what does or doesn't work first-hand is the only real way to master an indicator.’
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
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