This piece focuses pitchfork analysis and median line trading, and reviews how parallels of these trendlines can be utilized to give structure to a market advance or decline. The objective of this methodology is to attempt to identify the gradient or slope of the market trend in order to zero-in on possible levels of support and resistance[1].
We’ll start by exploring pitchforks and median lines in more detail followed by a deconstruction of a setup. This will illustrate how we formulate a given trade opportunity using pitchfork analysis and median lines.
This article on trading with pitchforks and median-lines is the second in a series exploring pitchforks and slopes:
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What is Andrew’s Pitchfork?
Pitchforks were developed by Dr Alan Andrews as a basic trend tool that identifies price channels and gives structure to a market advance or decline. These trendlines[4] offer reaction zones and offer a guidance in both price and time.
EUR/NZD[5] chart showing a pitchfork
What is a Median-line?
A median line is simply the bisector of a given channel or range. The median-line of a pitchfork often offers a point of reference and may trigger inflections or pivots in price. If a price breaks above the median-line, the target shifts to the upper parallel[6] – likewise if price breaks below the median-line, the target shifts to the lower parallel.
EUR/NZD[7] chart showing a parallels within a pitchfork
Using Pitchforks and Median Lines
The base case scenario is that when prices comes off the lower parallel
