Andrews Pitchfork is a tool that is used for predicting market reversals as well as entries into established trends. When the market is in an up or down trend, it can help identify clear channels that price often moves in. This can alert the trader to clear entry levels ahead of time, before the market even retraces.
Traders will also often use it to help predict when an asset’s direction is about to change, therefore allowing them to take advantage of market reversals.
You can see that once the three lines are drawn on your chart, it resembles a farmer’s pitchfork, hence the name.
Drawing Andrews Pitchfork can be difficult at times due to the fact that it can become subjective when identifying which highs and lows to use in the construction.
However, once drawn, the pitchfork is simple to use.
Most trading platforms make it even simpler for the trader as they include an indicator that plots the lines on your chart without needing to calculate anything.
For example, using Tradingview, we can draw Andrews Pitchfork by identifying three swing points in the market.
This is you can see the indicator draws another two lines which is between the extreme boundary and the medians and is marked by the green zone.
Entry Signal – > Possible short entry
You can see how it bounces off from the lower boundary. So, You can also use the indicator as small scalps of mean reversion trades which are part of retracement.