Andrews' Price Pivots

Andrews defined pivots in his original course as,

“…a turning point. It is the extreme on a bar chart
where a change in trend takes place”.

Upon a quick glance, most would assume this means a true price reversal – price goes up, stops, and turns back down. However, if we look at the word from an engineering perspective, we can describe a pivot as,

“...about which something rotates or oscillates”.

Andrews was an engineer trained at MIT, who later taught engineering courses at the university level. It would probably be safe to say he thought in engineering terms. So, that being said, he likely viewed price pivots as, “about which PRICE oscillates”. This definition brings about a much wider view of the word.

Andrews defined a price gap in his original course,

“…when no price on today’s range
is opposite any of yesterday’s range."

Later in Andrews course we find passages including,

“…a gap, (which is 2 P’s)” or 2 pivots,
and “…a gap being a negative reversal”.

Based on these observations it appears Andrews viewed price gaps as pivots as well in the sense that he defined the word pivot.

Andrews also added,

“Technically and empirically the price at one extreme of a days range may be opposite the extreme of the next day’s range,
and still have the properties of a true gap.”

Andrews could be referring to a price “plunge” as he mentioned from time to time throughout the course. A price plunge is characterized by a long price bar that passed through one of his lines.

Andrews apparently viewed price reversals, price gaps, and price plunges as “pivots” about which price oscillates. Interpreting Andrews words in this sense puts aside the view as a “pivot” being merely a price reversal.

If you continue to struggle with the term “pivot”, perhaps a more acceptable term would be “significant price event (SPE)”. This term lets us know that when price reaches one of the Andrews lines – price SHOULD do something significant. The significant possibilities include price reversing, gapping through, or plunging through the lines. This assumes you have chosen the proper line about which price is oscillating. If you have drawn a line about which not many significant things are happening, well, you have a pretty insignificant line. Perhaps a line drawn from different “pivots” would be more significant.

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