Andrews Pitchfork at Trade10.com- The science of trading market momentum for stocks, options, futures and bonds.

Critical Day Analysis

Our critical day analysis is all about trend reversals. We tell you when there is a high potential for a reversal of the short trend and we've been doing it since 1994 with an 80%* accuracy.

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Andrews Pitchfork

Andrews pitchfork is a study using trendlines. A basic understanding of trendlines and support/resistance levels is appropriate when finding application and interpretation using Andrews Pitchfork's. In constructing the study, starting points are chosen. The first is a major peak or trough on the left side of the chart display. The second and third starting points are chosen to be a major peak and a major trough to the right of the first point. After all starting points have been decided, draw a trendline from the first point (the most left) so that it passes directly between the right most points. This line is called the handle of the pitchfork. The second and third trend lines are drawn beginning at the starting points and parallel to the handle. Dr. Andrews suggested that prices make it to the median line (or handle) about 80% of the time while the price trend is in place. This means that while the basic long term price trend remains intact, Dr. Andrews believed that the smaller trends in price would gravitate toward the median line while the larger price trend remained in tact. When that does not occur, it may be evidence that a reversal in the larger price trend may be in progress or provides evidence of a stronger bias at work in market. When price fails to make it to the medial line from either side, it is often an expression of the relative enthusiasm of buyers and sellers and may predict the next major direction of prices. If prices fail to reach the median line while above the median line, it is a bullish and failing to reach the median line from below is bearish.

Andrews Pitchfork charting example

Look for validation of support and resistance to help identify if penetration of one of the lines or levels is significant. A reversal or continuation of a trend is often the resolution of a breakout of prices from a trading range or pattern. Basic support and resistance principles indicate that when price penetrates a previously validated support line, the line then becomes a resistance level. Similarly when price rises above a validated resistance level, the level then acts as a support zone while prices remain above it. It is a good idea to watch volume changes when price is approaching a support or resistance level. Volume will often give indication of the relative enthusiasm behind the current movement.

Andrews pitchfork charting example

To the right technical studies are examined in more detail to provide a sense of conformational evidence for traders of the critical day. Click on any of the terms to take a closer look at a technical discussion on that topic. All formations, patterns, indicators and technical tools fail at various times and so should only be used to build a body of evidence in forming a trading decision rather than being solely relied upon. There are a number of valuable studies that lead to intuitive understandings about price and volume but a strong compliment to technical analysis is an understanding of the trends and changes in the fundamentals and economic activity that ultimately lead valuation levels in the markets.

Trend Reversals

A trendline is an indication of levels of support and resistance in the market place. Price ranges, and extremes in price are smoothed in a way by using trendlines. In a fashion, trendlines help us to determine acceptable valuation levels during a certain time period.

Longer term trendlines can indicate the various support or resistance levels of price that is mutually agreed through free market operations. As time and conditions change, so do the perceptions and evaluations of value, which leads to penetration of previously held valuation beliefs. Penetration of a long term trend line is an indication of changing supply and demand and could point to a trend reversal

Price break from a pattern or indicator can lead to a trading opportunity through early recognition of a change in the basic supply and demand forces at work behind the market price. When looking at any pattern or indicator it is best to have confirmation of price and supporting evidence for the new direction of prices before making any trading decisions. There are many types of reversal patterns and indications of trend in technical analysis. Find and test the ones that conform to your trading horizon, risk level and personal circumstance as an approach to determining when changes in supply and demand become a tradable event.

Most Recent Signals

Walk through a critical day

The graphs show a price plot of the Dow Jones Industrials from Sept 28/00 to early November. The First graph ends on November 3/00, two days before an upcoming critical day on November 7/00. Our members looking at the market are expecting a trend reversal to occur due to the high rate of success in our research. Ideally a member will be using their own skills to judge the supply and demand changes, using technical and fundamental indications to confirm suspicions of a reversal, and trade accordingly.
On the second graph we see that the price action on November 6 was a bullish day, reversing the short trend so that the short trend leading into the critical day is now up. A critical day is an expectation of a reversal of the short trend that immediately precedes the critical day. In the case of the November 7 signal, given to members 3 days before, is an indication that the upward moving trend, recognized at the close of November 6 is expected to reverse direction.
On the third graph we can see that November 7 was a low volatility after a large gain on November 6 of about 160 points for the Dow Jones Industrials. The subsequent move over the three days following the November 7 signal saw the Dow Jones Industrials fall 376 points. The next day, November 13, the Dow Jones Industrials lost an additional 83 points with intra-day low a full 609 point loss since the open on the critical day.

Most recent signals

A closer view of the most recent signals. You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day. Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day. A failed signal can therefore provide as much information and opportunity as a successful one. Take a look at tech studies to develop a sense of trend reversals and use.