How to use Andrews’ Pitchfork channel technique?

Technical analysis has different ways of drawing a channel. A simple channel is drawn by connecting the pivotal lows and a parallel line from the tops when the trend is on upside.

On other hand during a downtrend it is important to connect the tops together with a trendline and then projecting a parallel line on downside. These are simple ways of drawing a channel but experience is required to predict which channel prices are going to follow in future.

Another way to draw a channel is using Andrews’ Pitchfork method. As per this method a median line is drawn connecting pivotal levels and 2 equidistant lines are drawn around this median line. The below example shows Andrews’ Pitchfork line on Nifty which was first published on 23^rd April 2014 morning research report “The Financial Waves short term update”

Nifty daily chart:

(a few wave counts are deleted from the above chart but shown in original report)

We are showing Andrews’ Pitchfork Channel on daily scale. This channel has a median line and 2 equidistant lines around it. Looking at the movement post w wave from March 2014 onwards prices are moving exactly within this red channel and found support near the central median line. Also please note that since the trendline is sloping on upside the resistance will keep on increasing higher with each passing day.

One more black channel is drawn by connecting the major lows of 5118 and 5980 levels and a parallel line from the highs of wave a. The resistance as per this channel ………We will visit this black channel if prices break above the upper trendline of Andrews’ pitchfork near ………. On other hand, if 6700 is broken it will challenge the median line and will result into short term reversal.

In addition to channels we also use Elliott wave counts, momentum indicators, Moving averages to determine the trend. Subscribe “The Financial Waves short term update” and get access to the entire research during this volatile month of Elections! For subscription options visit http://www.wavesstrategy.com/index.php/store.html or Contact us at helpdesk@wavesstrategy.com