How to properly use Pivot Points in your tradingA flaw many traders have is the habit of seeking “certainty” via indicators. It’s not uncommon to see charts with 5-7 indicators overlaid on them. However, the traders that seek certainty through indicators are usually the same traders that don’t “dig deep” into the indicator to understand how it’s built.
Today we will “dig deep” into a very useful indicator that can generate significant reference points. This indicator is useful for pinpointing entry levels, stop loss levels, and profit targets.
Pivot Points: from pit to platform
A little-known fact is that Pivot Points originated differently to other indicators. Contrary to most technical indicators, they originated within trading pits of equity and futures exchanges. This pragmatic origin is perhaps the reason why Pivot Points remain one of the most useful indicators out there.
To properly understand Pivot Points, we need to explore how they are calculated.
Note that Pivot Points can be calculated for any time horizon. Traditionally, pivots were calculated based on daily data. However, within FX this might not be the best way to employ them. But more on this later. For now, let’s start by understanding how daily Pivot Points are calculated.
The Pivot Points formula
P = Central Pivot Point = (Previous Day High + Previous Day Low + Previous Day Close)/3
R1 = Central Pivot * 2 – Previous Day Low
S1 = Central Pivot * 2 – Previous Day High
R2 = Central Pivot – S1 + R1
S2 = Central Pivot – R1 – S1
R3 = Central Pivot – S2 + R2
S3 = Central Pivot – R2 – S2
Pivots can help you sell high and buy low
If there is one principle that most traders know but tend to neglect, it’s “buy low and sell high”. However, the concepts of “high” and “low” are relative and not absolute. With Pivot Points—along with their statistical edge—we can define high and low in a very robust way.
You know that the odds can be in your favour if you are a buyer at S1. If price rallies past the central pivot and reaches R1, you might want to take some risk off the table. This is because R1 is often the high for the day.
The same rationale goes for S2 and R2. If price exceeds S1 and reaches S2, the odds can be tilted in your favour. Buying at S2 with a target at R1 is another solid way to exploit the statistical edge of Pivot Points.
Adapting Pivots to the FX market structure
One key difference in FX that throws some people off-balance is that there isn’t a centralised market open and close. In reality, three main money centres operate during a 24-hour period.
What this means is that there are actually three “market opens and closes”.
The Asia/Pacific session: The majority of turnover in this time zone takes place in Sydney, Tokyo, Hong Kong, and Singapore. Typically, there will be exporters and regional central banks active in this session. However, the liquidity is nowhere near as deep as it is during London or New York. As such, the price action is not usually as interesting as it is during the other sessions.
The London session: This is still the most important session of the day, for geographical reasons above all else. Along with London, other European financial centres are active—Frankfurt, Geneva, and Paris. That’s why large corporate flows activity takes place during this session and contributes to the deep liquidity that London benefits from
The New York session: The Forex market experiences its peak in turnover as London passes the baton onto New York. However, whereas the London session tends to be trendy, New York has much more volatility and chop. Therefore, the best trading strategies to deploy change significantly. After noon in New York, liquidity starts to dry up quickly.
What’s next?
Pivot Points can be a versatile technical tool to help ascertain potential supports and resistances.
If nothing else, Pivot Points allow you to walk into any given session—day, week, or month—ready and prepared to react to the market’s movements. Being prepared already puts you in an advantageous position.
Pivot
$HWM is forming a nice pivot. Can it move higher from here?Notes:
* Strong up trend since 2020
* Great earnings in the recent quarters
* Basing for the past ~14 months
* Recently bounced off historical highs around $31
* Forming a nice and tight pivot area around $35
* Offering a very low risk entry
* Showing signs of strength and accumulation
Technicals:
Sector: Industrials - Specialty Industrial Machinery
Relative Strength vs. Sector: 1.33
Relative Strength vs. SP500: 1.31
U/D Ratio: 1.74
Base Depth: 33.89%
Distance from breakout buy point: -4.99%
Volume 8.49% above its 15 day avg.
Trade Idea:
* You can enter now as it's trying to break above the $35 resistance level
* Or you can wait for a clear break above it before entering
* If you're looking for a lower entry you may find one around the $34.3 area as that's the bottom of the tight range
* This stock usually has local tops when the price closes around 10.23% above its 50 EMA
* Consider selling into strength if the price closes 10.03% to 10.43% (or higher) above its 50 EMA
* The last closing price is 3.69% away from its 50 EMA
BTC dump and what to expectRight now there is panic due to America releasing the official statistics, BUT BTC is still the most stable thing on the market to invest into as some people say. I drew some price predictions and other stuff.
The fixed volume shows the price that people most buy out BTC and I left the pivots there for you (Weekly).
There is a technical flat for the last 1000 bars, but that's due to the fact that we are gathering the power for some huge price movement at the moment.
For the indicator DM @Sadesguy
BTCUSDT weekly pivots and hand zonesas for today (24.07.2022), the market is slowly gathering power for a bigger movement in a flat (the channel is proving it as it's drawn for a thousand bars). I marked the possible movement and I assume that the price will be within the channel or in the middle of it for this week.
To get the indicator DM me (@Sadesguy)
xela double top breaklooking for a higher low near previous pivot (0.1170) and an intraday pattern for entry for
(0.1364) pivot break.
NYSE - SwingTrading: Buy Signal BBSIThe stock BBSI (Barret Business Services) on our watchlist crossed a low risk enty point and generated a buy signal, we have opened a position and added BBSI to the JS-TechTrading portfolio.
SL is less than 5% (SL at 71.59), win target is > 10%.
BBSI has a high relative strentgh (IBD style) and broke out of a low risk entry point.
We have recommended to open a BBSI position to our clients in real-time earlier today.
NYSE - SwingTrading: Buy Signal LIThe stock LI (Li Auto) on our watchlist crossed a low risk enty point and generated a buy signal, we have added LI to the JS-TechTrading portfolio.
SL is less than 5% (SL at 37.05), win target is > 10%.
LI has a high relative strentgh (IBD style) and broke out of a volatility contraction pattern earlier today under high volume. Until now, the price / volume action is great.
We have recommended to open an LI position to our clients in real-time earlier today.
Mind if I short some alts and bitcoin?bitcoin is looking like it's about to dump to 18k if we don't stay on ^19500k or if we won't have any price consolidation anytime soon since we dumped on some liquidations 12.07.22 0:30am +3UTC.
Judging from previous experience we should not go lower unless something happens, and it looks like we will be trading in ~19-19800k flat line
PM me (@Sadesguy) if you have any questions
Channel in daily timeframeHi everyone
I hope you have a good day
Today, reaching the bottom point of the xau/usd channel, I decided to share this analysis
The first point is that dxy has reached the ceiling of its daily channel
If it does not break the channel, this analysis can still be valid
In the comments section, I share the dxy channel
Awaiting the EURUSD Right now, we shouldn't be selling as there isn't a good ratio.
First, we need to see a confirmation that the next drop begins and then to open a trade.
In best case scenario, that would be, after price goes a little bit above the previous high and it then shows rejection.
Entries could be made after an engulfing candle.
We're not looking for buys but only to sell!
EURUSD 1H Preferably suitable for scalping and accurate as long as you enter carefully the price behavior with the drawn areas.
With your likes and comments, you give me enough energy to provide the best analysis on an ongoing basis.
And if you needed any analysis that was not on the page, you can ask me with a comment or a personal message..
Enjoy Trading... ;)
USDCHF 1D Short ScenarioPreferably suitable for scalping and accurate as long as you enter carefully the price behavior with the drawn areas.
With your likes and comments, you give me enough energy to provide the best analysis on an ongoing basis.
And if you needed any analysis that was not on the page, you can ask me with a comment or a personal message..
Enjoy Trading... ;)
XAUUSD 1D ScenariosPreferably suitable for scalping and accurate as long as you enter carefully the price behavior with the drawn areas.
With your likes and comments, you give me enough energy to provide the best analysis on an ongoing basis.
And if you needed any analysis that was not on the page, you can ask me with a comment or a personal message..
Enjoy Trading... ;)
Entry on EURUSD today! We wanted to see price reaching our zone on EURUSD but it looks like right now there's not enough buying pressure.
This is the reason why we don't take trades towards the zone and against the trend but just wait for the right moment instead.
It looks like this moment is now. Not the way we wanted it, but we trade what we see and we're now looking to sell from current price levels.
Stops will be above 1,0615 and we should use less risk on this trade because this SL level is still aggressive.
A SL above 1,0780 is much better but then we don't have a decent risk to reward ratio.
Targets are still below the previous low, we are expecting a breakout!
How to Calculate a Pivot point.In this quick tutorial I have shown how you can take the formula (high+low+close)/3 to create a dynamic support and resistance level, which you can use to make trading decisions, only buy above pivot and sell below. Now it is handy to have an indicator to do this manually for you everyday, as every day a new pivot is generated. This pivot will filter down possible bad entries by putting you the right side of the trend, wait for breaks of this level to tell you potential trend changes... If anyone is interested I could do a tutorial on how to create the Support 1, 2, 3 and Resistance 1,2,3 levels... at the end of the day nothing wrong with learning the mechanics of your trading system! Pivots can work extremely well on an intraday timeframe, 1m,5m,15m charts will often see trades appear around these levels.. Keep strong and prosper. ZenFlo
BRENT, Short. Big Picture, target 106.02Hey traders, BRENT is going down, the price had an upward at 78% retracement, and now it might go down until 50% (106.02) of Fibonacci retracement or Daily S2 (105.3), short term.
But, please keep in mind that firstly, it might bounce at 109.6 (S1) until the daily Pivot point (114.17) or 115.38 (23% fib retracement)
Pls follow the trend, wait for the retracement and then go with the main direction of the market. (Short)