In this article, we are drawing Pitchfork channels on AUDUSD.
On the weekly AUDUSD chart, we can see that the pair is in a downside Pitchfork channel, connecting April ’11 high, Feb ’16 low and Jul ’18 upside correction swing. A recent break below the strong horizontal 0.7477 resistance is opening further downside extension into the 0.7100-0.7200 zone somewhere around the 50% of the first channel half.
Using Andrews Pitchfork tool hint: to plot Andrew’s Pitchfork on a chart, first look for three consecutive big highs or lows at the asset’s price. These key points are highlighted in the chart below.
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We have used the combination of the top-down trading analysis and the Andrews Pitchfork channels to get to a trading entry stop loss levels and targets. On the daily chart, there is a new downtrend Pitchfork channel that could lead to a test of the lower Pitchfork channel line 0.7100 level. A rejection from 0.7550-0.7600 Median line zone led to a downside swing into the 0.7250 level where we have a consolidation triangle. This triangle could be used for a short trade entry. If you go short at the market price, place the stop loss above the 0.7450 level and target lower Pitchfork channel line.
Happy trading! (click on the chart to enlarge it)