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Andrew’s Pitchfork Chart Tool for Technical analysis in Stock Market

Posted By On 5/15/2009 12:59:00 PM Under ,

1. As a technical analyst one has to be on the look out for all the patterns which helps one to identify the correct trend in the stock market. One such tool is Andrew’s Pitchfork Chart Tool is a type of ‘auto-trendline’ tool and same can be effectively used to identify the trend in a market and is of utmost use when the market appears to be ‘channeling.’ One can consider this tool similar to Bollinger Bands which are infact a standard deviation tool.

2. One must be an expert to use the Andrew’s Pitchfork Chart Tool as one has to be able to identify the correct points from where the same needs to be started. One has to start with a key high, draw to a key low, and then draw back up to a retracement high. The points have been marked with yllow colours where the clicks have been undertaken. To be doubly sure do remember to check the grid which has been created as automated programs at times do draw it differently.for I have labeled the steps on the chart and then drew in yellow highlights on where I clicked. Check the resulting grid that your program draws for accuracy. Look for
the points which have been given respect by market and a considerable time has elapsed.

3. Thus one can learn following aspects from the chart i.e. support and resistances have been respected in the grid so formed and a clear pattern only emerges when a clear breakout is seen from the grid. Thus looking at the chart of S&P, one can say that odds favor a pullback down to a minimum of the mid-line could be expected - that’s currently at 750, but as more time passes, the mid-line will trail lower, perhaps down to the 700 level.

4. If price breaks upward from here OUT of the confirmed trendline to the upside, we should expect a continuation move to the upside and an invalidation of the grid, which would hint at the end of the Bear Market.

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