Dr. Andrews Rules for the use of the Andrews Pitchfork
Dr Andrews developed a set of rules for the application of his Andrews Pitchfork. Here is a description and several exampes of Rule No. 1.
Dr. Andrews Rule No. 1
“You are amongst the very few who know that price is always headed towards the newest Median Line” (Dr. Alan Andrews).
What Dr. Andrews meant by this is that there is a high probability that price will reach the current Median Line. There is some reference that price will reach the Median Line approximately 80% of the time. TradingMotives is has been building statistical research to help verify this claim, but also use sliding parallels to monitor changes in price behavior that can pre-warn when a trend is about to end and tend to rely on that method more than a statistical reference.
Dr. Andrews Rule No. 1 Example $DF_F Daily Chart
As you can see in this daily chart of $DX_F the blue Dr Andrews Rule No. 1 worked very well. Price headed towards the Median Line, made contact with it, then reversed.
There are other rules relating to the situation where:
A) Price fails to reach the Median Line (Rule No. 8 “Price Failure”);
B) Price penetrates the Median Line with a gap or a “zoom” (Rule No. 7 “Penetration of ML”).
Those examples are covered separately.
Dr. Andrews Rule No. 1 Example on $XLMUSD Hourly Chart
In this hourly chart of Stellar ($XLMUSD) Dr Andrews rule no. 1 worked very well using the red Median Line. Price headed towards the Median Line and made contact with it. There was a second attempt to intersect with the Median Line which failed to do so. This is also an important signal that buyers were stepping in. This was subsequently confirmed when price rose up through the quartile which had previously acted as resistance. TradingMotives refers to this situation as a change of price behavior on this time-frame.
These two examples illustrate Dr. Andrews Trading Rule No. 1 very well.
Dr. Andrews Rules – are there other related rules?
There are other rules that Dr Andrews developed which can be read in association with Rule No. 1. Rule Number 6 states that “Another reversal rule to keep in mind is that prices tend to reverse not only from, or near the Median Line, but also at ML extensions and at any Median Line Parallel (MLH) or extensions of the MLH.”
Examples will be posted separately.
Dr. Andrews Rules – Video Examples of Rule No. 1
Where Prices are Always Headed
Median Line Analytics – Education Modules
If you are not familiar with Median Lines, these education modules have been designed to provide some basic knowledge and terminology used with Median Line Analytics.
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