Andrews Pitchfork on Nifty: A Worked Example for Indian Traders

What Andrews Pitchfork Actually Measures

Andrews Pitchfork, also called the median line study, was developed by Dr Alan Andrews. It is not an oscillator and it does not produce a number. It is a geometric framework of three parallel sloping lines that project where price is statistically likely to find support, resistance and equilibrium as a trend unfolds. The central line is the median line and the two parallel lines on either side are called the tines or the upper and lower median line parallels.

The core idea is mean reversion inside a trend. Andrews observed that after price moves away from a swing, it tends to return towards the median line roughly 80 percent of the time before the next leg. So the median line behaves like a moving target or a magnet, while the outer tines mark the edges of the channel where the trend is most likely to pause or reverse. Because all three lines are sloped, they adapt to a rising or falling market in a way that flat horizontal support and resistance cannot.

For an Indian index trader this matters most on Nifty 50 and Bank Nifty, which trend in clean multi week swings around events such as RBI policy, the Union Budget and quarterly earnings. A well anchored pitchfork gives you a rising lower tine to buy against and a rising median line as a logical first target, both of which slope upward over time instead of sitting at one fixed price.

The Three Pivots: How To Pick A, B and C

Everything depends on choosing three correct pivots. Pivot A is the starting anchor and should be a clear, significant swing extreme, a major high in a downtrend setup or a major low in an uptrend setup. Pivots B and C are the next two opposite swings: in an uptrend, B is the swing high after A and C is the higher low that follows B. The median line is then drawn from A through the exact midpoint between B and C, and the two tines are drawn parallel to it starting at B and at C.

• Pivot A: the origin. Use a swing that the whole chart respects, ideally confirmed by a reversal candle and a volume spike.
• Pivot B: the first counter swing after A. In a rising setup this is a swing high.
• Pivot C: the second swing, opposite to B. In a rising setup this is a higher low that holds above A.
• Midpoint of B and C: the median line passes from A through the price exactly halfway between B and C at that point in time.
• Validity check: at least the last two or three touches of the tines should line up with real candles. If they do not, your pivots are wrong, so re anchor.

Worked Example: Drawing A Pitchfork On Nifty 50

Here is a fully worked, illustrative example on the Nifty 50 daily chart. Assume the following three closed pivots, which form a classic rising sequence. These are realistic round levels chosen to teach the geometry, not a forecast.

First find the midpoint of B and C in price: (23,600 plus 22,700) divided by 2 equals 23,150. The median line is the straight line that begins at A (21,800) and passes through 23,150 at the bar where C printed. Extended forward and to the right, that line keeps rising at the same slope. The upper tine is a line of the same slope that starts at B (23,600), and the lower tine is a line of the same slope that starts at C (22,700). Because the gap from the median line to each tine equals half the B to C distance, each tine sits 450 points from the median line at the origin: 23,150 minus 22,700 equals 450, and 23,600 minus 23,150 equals 450.

Now project it. Say twenty trading sessions later the median line has risen to about 23,900 because of its upward slope. At that same session the lower tine sits near 23,450 and the upper tine near 24,350, keeping the 450 point half width. So if Nifty pulls back into roughly 23,400 to 23,500 and holds, that is the lower tine acting as rising support, your median line target is around 23,900, and the upper tine near 24,350 is the next resistance. The whole channel has slid upward with the trend, which is exactly the advantage of a sloped tool.

Reading The Chart: What The Three Lines Look Like

Picture the daily Nifty candles climbing from the 21,800 low at the bottom left of the screen. From that low, three lines fan out to the upper right like the head of a pitchfork. The middle line, the median line, cuts straight through the centre of the price action. Above it runs the upper tine, tracing the tops of the rallies near 24,350 in our projection. Below it runs the lower tine, tracing the bottoms of the pullbacks near 23,450. The candles oscillate inside this rising channel, repeatedly drifting up to tag the upper tine, falling back to the median line or the lower tine, then pushing up again.

• Lower tine (around 23,450 in the projection): rising support. Pullbacks that hold here in an uptrend are the highest probability long entries.
• Median line (around 23,900): the magnet and the first logical profit target for a long taken off the lower tine.
• Upper tine (around 24,350): rising resistance. Price tagging this line and stalling is where momentum longs are trimmed or partial profit is booked.
• A decisive daily close below the lower tine warns that the trend is weakening and the pitchfork may need re anchoring on fresh pivots.
• A strong close above the upper tine signals trend acceleration. Price may then ride the upper tine, which becomes the new support.

Turning The Pitchfork Into A Nifty Options Trade

Now translate the chart read into a real F&O trade using the projection above, where the lower tine sits near 23,450 and the median line near 23,900. The Nifty lot size is 65. Suppose Nifty pulls back to 23,450, prints a bullish reversal candle on the lower tine, and you decide to express the long via a weekly call rather than futures to cap risk. All premiums below are illustrative.

• Setup: Nifty spot near 23,450 on the lower tine. You buy 1 lot of the 23,500 weekly call at a premium of 120.
• Cost to enter: 120 times 75 equals 9,000 rupees, which is also your maximum loss if the call expires worthless.
• Target: the median line near 23,900. If Nifty reaches it and the call premium rises to about 320, you exit.
• Gross profit: (320 minus 120) times 75 equals 200 times 75 equals 15,000 rupees.
• Risk to reward: risking 9,000 to make about 15,000 is roughly 1 to 1.6 before costs, which is acceptable for a high probability median line target.

If instead you traded one lot of Nifty futures long from 23,450 with a stop just below the lower tine at 23,350, your risk is 100 points times 75, which is 7,500 rupees, and the move to the median line at 23,900 is 450 points times 75, which is 33,750 rupees gross. Futures give a bigger absolute move but require far more margin and expose you to open ended loss if the lower tine fails on a gap, whereas the long call caps your loss at the premium paid. The sloped lower tine is what gives both versions a clean, nearby stop.

Costs And Taxes On The Indian Side

A worked example is not honest unless it accounts for costs. On the option trade above, the main statutory charge is Securities Transaction Tax. STT on options is charged at 0.1 percent of the premium on the sell side. When you sell the call to close at premium 320 for 75 quantity, the turnover is 320 times 75 equals 24,000 rupees, so STT is about 24 rupees. If an option is exercised rather than squared off, STT is charged on the settlement value, which is far higher, so most traders square off before expiry to avoid that. On top of STT you pay brokerage, exchange transaction charges, GST on those charges, SEBI fees and stamp duty, which together typically run a few tens of rupees per leg on a discount broker.

On the tax side, profits from trading Nifty and Bank Nifty futures and options are treated as non speculative business income in India, not as capital gains. That means your net F&O profit is added to your total income and taxed at your applicable slab rate, and you can deduct trading related expenses such as brokerage, internet and advisory costs. This is different from equity delivery, where Short Term Capital Gains are taxed at 20 percent and Long Term Capital Gains above 1.25 lakh rupees in a year are taxed at 12.5 percent. So if you ever use a pitchfork to swing trade a cash market stock like Reliance or HDFC Bank on the daily chart, those gains follow the capital gains rules, while the index F&O trade follows business income rules.

Timeframes And Settings For Indian Indices

The pitchfork has no period input like a moving average, so the only real setting is which timeframe and which pivots you anchor on. For positional and swing trading of Nifty and Bank Nifty, the daily chart is the workhorse, with pivots usually two to eight weeks apart. For longer portfolio level reads on indices or large caps, the weekly chart anchored on multi month swings projects the dominant trend channel for the year.

For intraday index trading, especially on Bank Nifty which is very fast, a 15 minute or hourly chart works, but the tines redraw more often because intraday swings are noisier. Bank Nifty has a lot size of 30 and FinNifty has a lot size of 60, so the same 100 point stop costs different rupees on each instrument: 100 points on Bank Nifty futures is 1,500 rupees of risk, while 100 points on FinNifty futures is 2,500 rupees. Match your pivot timeframe to your holding period, and remember weekly index option expiries mean theta decay accelerates into Tuesday and Thursday, so a pitchfork target several sessions away is better expressed in futures or a deeper in the money option than a far out of the money weekly.

• Positional Nifty or Bank Nifty: daily chart, pivots two to eight weeks apart.
• Long term index or large cap view: weekly chart, pivots several months apart.
• Intraday Bank Nifty: 15 minute or hourly chart, expect frequent re anchoring.
• Always confirm the current lot size on the NSE site, since the exchange revises lot sizes periodically.

Combining The Pitchfork With Other Tools

A pitchfork tells you where price may react. It does not tell you whether momentum agrees. Pairing it with one momentum tool and one volume read filters out a large share of false touches. The strongest signals come from confluence: a pullback to the lower tine that lands on a prior support, shows an RSI turning up from near 40, and arrives on falling down volume.

Notice the difference in nature. RSI and MACD are momentum readings, moving averages and Fibonacci levels are price structure, and the pitchfork supplies the sloped geometry that ties a target to the entry. When three of these point at the same Nifty level, for example the lower tine at 23,450 coinciding with the rising 50 day average and a 50 percent Fibonacci retracement, the trade is far more reliable than any one tool alone.

Limitations, False Signals And Risk Control

The pitchfork is only as good as its pivots. Pick the wrong A, B or C and every tine is wrong, which is the most common reason traders see false signals. It also performs poorly in choppy, rangebound markets where there is no clean trend to channel, and it lags after a sharp regime change such as a gap down on a budget or a global shock, because the old pivots no longer describe the new market. Treat a clean break and close beyond a tine as a signal to re anchor, not as a level to fade blindly.

Risk control is non negotiable. The sloped lower tine gives you a natural stop just below it, so size every position from that stop, not from a round number. In the Nifty example a futures stop 100 points below the entry is 7,500 rupees of risk per lot, so a trader who limits risk to 2 percent of a 5 lakh rupee account, which is 10,000 rupees, can take one lot and no more. Never widen a stop to stay in a losing pitchfork trade, and never average down below a broken lower tine in the hope the trend resumes.

• Re anchor when price closes decisively beyond a tine. Do not keep an outdated pitchfork on the chart.
• Avoid the tool in flat, rangebound phases where there is no real trend to channel.
• Size positions from the lower tine stop, not from a guess or a round number.
• Always pair with momentum and volume so you are not trading a touch the trend has already abandoned.
• Keep a journal of which pivot choices led to clean versus messy pitchforks so your anchoring improves over time.

Sources and Further Reading

For authoritative data and further reading, refer to Zerodha Varsity, Investopedia, NSE India and NSE Indices (Nifty Indices). Always confirm current rules, rates, lot sizes and contract specifications on the official source before you trade.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to Zerodha Varsity, Investopedia, NSE India and NSE Indices (Nifty Indices). Always confirm current rules, rates and contract specifications on the official source before you trade.