V.3:2 (64-65): Median Line Market Analysis by Thomas E. French

V.3:2 (64-65): Median Line Market Analysis by Thomas E. French
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Median Line Market Analysis by Thomas E. French

The Median Line (ML) method of market analysis was first developed by Professor Alan Hall Andrews, a Massachusetts Institute of Technology (MIT) engineering graduate. The Median Line technique of geometric technical analysis is also referred to by some as the Andrews line method. The purpose of a Median Line is to predict a price point where the market will reverse.

The basic concept behind the method is really simplicity itself, that of action and reaction. Andrews, who I have worked closely with over the past couple of years studying and applying his methods, credits his late friend Roger W. Babson (early 1930's) with helping him develop this technique. Babson applied Sir Isaac Newton's law of physics, that actions and reactions are equal and opposite, to market analysis. From these conceptual beginnings Andrews evolved his own method of market analysis.

The cornerstone of this entire approach is the Median Line (ML). Before exploring this further we should define median. The dictionary states median means in the middle or a line that divides into two equal parts. Charts 1, 2, and 3 graphically depict this concept. The dashed line represents a ML intersecting a straight line at the point denoted by a circle. Note that regardless of the of the straight line, the ML intercept represents a point where there exists an equal amount above as well as below the point of intersection. This is indicated in Chart 1 where AB = BC, in Chart 2 where DE = EF, and in Chart 3 where GH = HI. The point to note in each case is that the ML actually bisects the straight line.

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