Foundations of Trading Part 3: Andrews Median Line Tools

The Andrews Median Line is a simple tool that can be applied to anything that fluctuates. We can apply the Median Line to the price flow of any instrument in any time frame.

As shown in the chart, the Median Line set simply bisects a price swing using the relationship from any 3 alternating pivots and then projects price back to its median.  Think about it, if you have two extremes, (opposites) you must also have a center. When you expand anything out to its extreme, there is a high probability of it returning to its median.

 

 

Price can interact with the Median Line in various ways. Alan Andrews gave us 5 main rules to consider. These rules come from the Andrews original Action Reaction course which is posted on our site. 

"There is a high probability that"

  1. prices will reach the latest ML
  2. prices will either reverse on meeting the ML or gap through it
  3. when prices pass through the ML, they will pull back to it
  4. when prices reverse before reaching the ML, leaving a "space", they will move more in the opposite direction than when prices were rising toward the ML.
  5. Prices reverse at any ML or extension of a prior ML.

People often ask if the Median Set they drew is valid and the answer is that they are all valid, you cant do it wrong. They will show you the relationship between any 3 alternating pivots. The next step will be to make that information functional for trading.

We use theses tools very precisely and purposefully (no guessing or hoping) which is why we covered Market Structure (swings) in our previous lesson. So you can isolate particular structures to draw from. Below is an example of that with some Gold charts we have been following in our live Market Maps sessions

Keep in mind that these are tools, they provide information. While The Median Line tools describe the nature of price flow well, they are not magic channel lines or a crystal ball. We have a saying at MarketGeometry "Use your tools, don't let them use you" 

The best way to learn more is by doing. You gotta get your hands on it.  Draw, draw, draw and then draw some more. Draw every from every swing and every pivot. Make your own observations about how price interacts the the Median Line set as well as observations relating price to Andrews 5 main rules.

 

Shane

 

 

 

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