Here in part 6 of my “Exploring Charting Techniques” series, I discuss a unique way to identify the beginning and end of a market cycle. This is a part of the article as it appeared in the Stocks & Commodities magazine of December 2014.

There are many ways to approach it and many have tried, but only a handful of techniques work well to identify cycles. In this article, I’ll discuss a unique method that uses trend channels to find the beginnings and ends of cycles.

### Applying the Andrews pitchfork

Alan Hall Andrews is well known for creating a method called the Andrews pitchfork. Andrews describes his application as the median line method. The application of the median line method came from the ideas of Sir Isaac Newton and Roger Babson, including, among other things, Newton’s third law of motion — for each action, there is an equal and opposite reaction. In Figure 3, I show an example of how to draw a pitchfork. The first reference point to use for drawing a median line in a down or up moving pitchfork is the midpoint of the reaction between 2 and 3. The next point is a previous high or low point, labeled 1 on the chart. The median is line 4, which is drawn through these two reference points. Price will return to the median line about 80% of the time. If the price does not complete touching the median line, it will move in the opposite direction, past the price turning point 2 that was used for the construction of the median line. Typically, price will react around the median line.When the price returns to the median line, it will often move for some time around that median line before it moves in a new direction. After calculating and drawing the median line, Andrews added two additional lines (5 and 6) that are parallel to the median line from points 2 and 3. This creates parallel lines above and below the median line. These three lines are called the Andrews pitchfork. Prices tend to move for some time within this pitchfork channel, just as with trend channels. Also, just as with trend channels, prices find support & resistance at the lower and upper side of the pitchfork channel. Once prices move out of the channel you should start looking to draw a new channel.

Figure 3.