Discriminating Between Quality Pivot Point Set-ups and Non-quality Pivot Point Set-ups

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set-ups

Predictions and Analysis

GOLD and DXY Gold and Dollar Index Update DXY did come off from where it was meant to last week but has put up more than just a fight so far in the 92.74-92.50 range. The fight back was to be expected, but it’s doing better than envisaged so far here – and these conclicting signals urge caution now . no interest in getting involved in a battle of whipsaw.

ETHUSD Potential Trade Set-Ups Pretty dull still here. It’s not giving up without a fight but not a range we need to be involved in right now. Maybe if it breaks the upper dynamic holding back all rallies so far, but it looks like running into overhead supply at 477 so if you follow this break, should we see it, look to close out here and only enter long.

BCHUSD BCH Dollar Risk and Reward Approaches Consolidating gains above old structure – really strong looking and likely to turn up again soon. Ideally it will come back to 1516 and maybe 1461 but looks so far like 1516 will be the lowest it will go. Stick an order in with a stop below 1440. Or stick one in at 1446 – less chance of getting struck but also.

Gold XAUUSD Creating a flag formation with two strikes on the lower parallel signifying it’s still wanted whilst above 1286, so am buying as close to 1287.78 as possible with stop under 1286. First target 1305, then 1312-1313.

USDTRY US Dollar Turkish Lira This is striking impulse wave: and when it breaks down it’s a fabulous short Cannot short this whilst within the power of this massive impulse wave. But once it falls out of the parallel it becomes a massive short – once broken, look for any retest of the parallel from the underside once broken as a second shorting opportunity.

Bitcoin: BTCUSD Over Thanksgiving Entry Points for some potentially big trades ahead: neutral in near term ahead of the action Hoping you’ll have got out of longs when that pin bar mentioned in last update coudn’t be beaten. It was likely a serious player in a low volume market who knew what he was doing at an inflection point with good timing – on a holiday, but.

Silver: XAGUSD Look to Buy Dips It’s just about bearish enough to go long here. But no one seems very interested. It’s likely to need the dollar to break below it’s lower parallel (see DXY comment for back-up to this trade) before interest picks up here. One thing it has in its favour is those pin bars forming off the dynamic support shown on the chart. It’s.

Dollar Index: DXY So far DXY is displaying precisely the kind of technical price action you’d expect of something in the process of breaking down lower. the tiny continuation pattern with a bearish upwards slope, every move contained within the parallels that control this inverted flag formation. The dollar will try to rally from the lower parallel of the.

Brent Crude OIL UKOIL Trade Set-Ups for this Week Position: Flat – Just didn’t trust this short after it bounced at 61.70 first target and then started to build a near term low at 61.33 so closed out the short for just over 100 pips after spreads, as per updates to last comment. Disappointed at the time to close out a trade that had stopped behaving according.

Brent Crude OIL UKOIL Trade Set-Ups for this Week Position: Flat – Just didn’t trust this short after it bounced at 61.70 first target and then started to build a near term low at 61.33 so closed out the short for just over 100 pips after spreads, as per updates to last comment. Disappointed at the time to close out a trade that had stopped behaving according.

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Gold: XAUUSD How DXY is the gold trader’s best friend right now So far gold has behaved in the bear-mangling mode expected of it since the dollar broke down below key support on DXY at 94.26 (right hand chart) but it wasn’t too smart to let it go again at 1290. That rally on Friday was vicious for bears – the shape of price action as gold turned resistance at.

Bitcoin:BTCUSD It’s made a break above the small parallel and run into the first line of profit takers and sellers and so far holding up above that frustrating old dynamic. If you’ve gone long on the break above the parallel please raise the stop to right under the old dynamic – say just under 6575 – for maybe break even if this gets slapped back hard again. So.

Bitcoin: BTCUSD Almost BS free version The way this is behaving now, sliding down the upper parallel of the continuation pattern is still more bullish than bearish, though doesn’t look it, granted. it can spend a while yet grinding lower but so long as it finds support from 6450 pivot this is, surprisingly, looking like it might well make a break to the upside.

Bitcoin is now approoaching important resistance again at the break level/original shorting point from yesterday, at 6445- 6510, with the additional problem of the old dynamic support line that propped up the rallies from the summer lows hanging above it 6515. So it’s a near term short for day traders from 6510 with a stop 50 points above but only back to 6300.

BITCOIN: BTCUSD Update on Positions Not a bad day, so far but need to keep an eye on this short still. day-traders have made 250 points from the short from 6300 early in UK morning, then another 200 to 450 points from the long at 6050 just an hour later, depending on where you took profits and now we’re short once more from the highs of the day at 6450 with.

BITCOIN: BTCUSD Update on Positions Not a bad day, so far but need to keep an eye on this short still. day-traders have made 250 points from the short from 6300 early in UK morning, then another 200 to 450 points from the long at 6050 just an hour later, depending on where you took profits and now we’re short once more from the highs of the day at 6450 with.

Bitcoin: BTCUSD For what it’s worth right now, and looking at the bigger picture and pattern developing in first moment of calm since rising from bed, believe that Bitcoin is most likely to bottom at 5098 – a long way down from here – that view will only change if Bitcoin continues to hold up around current values and then turns up and breaks through parallel as.

BCH/DOLLAR BCHUSD Short Set-up Some interesting action by this crypto pair. Take a look on the 15 minute chart at the continuation patterns over just the last couple of days, just perfect, with great entry points. If you traded this since yesterday, so far so good. But when Bitcoin bottoms it will obviously snap back, giving bears a chance to hit it . so.

Trading Up-Close: Pivot Points

Pivot points are a tool that floor traders and market-makers have used for decades to predict the next trading day’s intra-day support and resistance levels. Pivot points are calculated using the previous day’s high, low and close. You don’t actually have to do the math, because the trading platform will do it for you.

At Schwab the pivot-point tool shows you seven levels. First, the pivot point itself, the orange line here–considered the equilibrium point–that’s the point around which the next day’s trading is expected to occur. And then, six other pivot levels, the blue lines–that’s three resistance lines above the pivot point R1, R2 and R3 and three support levels below it named S1, S2 and S3. That gives you a lot of data that you can use to determine when to enter a trade, when to exit a trade and where to place your stop. This data is important because all pivot levels can act as intra-day support or resistance. Think about them like rungs on a ladder. A break up through any pivot level is a bullish indication and suggests that there may be further upward movement to the next rung–and this signals a possible buying opportunity.

On the other hand, if the stock falls through any of the pivot levels, it is a bearish indication, and suggests an opportunity to short the stock. You can also use pivot points to set short-term targets for your trades. Let’s look at an example. As soon as a stock breaks through the pivot point to the upside, you might buy, with a potential target of R1. Here you might choose to sell some, or let them ride to the next target which could be R2. Similarly, if a stock drops down below the pivot, you might consider setting a downside target of S1. If it stays there and then drops further, you could short it with a target of S2.

So, remember, a break through any pivot level can indicate an opportunity. If the stock or index has been rising, and then starts to reverse, you can short this same stock or index you were previously long. Besides setting targets, pivot points can help you manage your risk by indicating where to set appropriate stop losses. For example, if you buy a stock because it broke through a pivot level, you might consider placing your initial stop under that level, to limit downside losses in case the stock reverses. If it continues rising and goes up through the next level, you could raise your stop to below that next level to attempt to lock in upside gains. Similarly, if you are short a stock because it broke down through a pivot level, you might place your stop just above that level to limit losses in case it moves higher. Remember, there’s no guarantee your stop order will be filled at or near your stop price.

Pivot points are often combined with other technical indicators, like moving averages and MACD, to gain added confirmation. To learn more about technical indicators and how to use them, watch the other videos in this series and subscribe to our You Tube channel.

Lee Bohl takes you through the important ways that using Pivot Points can be part of an overall trading strategy. He explains how the Pivot Points tool can be utilized to help identify potential support and resistance levels and give you a better idea of when to enter and exit trades.

Pivot Point

What is a Pivot Point?

A pivot point is a technical analysis indicator, or calculations, used to determine the overall trend of the market over different time frames. The pivot point itself is simply the average of the high, low and closing prices from the previous trading day. On the subsequent day, trading above the pivot point is thought to indicate ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment.

The pivot point is the basis for the indicator, but it also includes other support and resistance levels that are projected based on the pivot point calculation. All these levels help traders see where the price could experience support or resistance. Similarly, if the price moves through these levels it lets the trader know the price is trending in that direction.

  • When the price of an asset is trading above the pivot point, it indicates the day is bullish or positive.
  • When the price of an asset is trading below the pivot point, it indicates the day is bearish or negative.
  • The indicator typically includes four additional levels: S1, S2, R1, and R2. These stand for support one and two, and resistance one and two.
  • Support and resistance one and two may cause reversals, but they may also be used to confirm the trend. For example, if the price is falling and moves below S1, it helps confirm the downtrend and indicate a possible continuation to S2.

The Formulas for Pivot Points:

High indicates the high price from the prior trading day,

Low indicates the price from the prior trading day, and

Close indicates the closing price from the prior trading day.

How to Calculate Pivot Points

The pivot point indicator can be added to a chart, and the levels will automatically be calculated and shown. Here’s how to calculate them yourself, keeping in mind that pivot points are predominantly used by day traders and are based on the high, low, and close from the prior trading day. If it is Wednesday morning, use the high, low, and close from Tuesday to create the pivot point levels for the Wednesday trading day.

  1. After the market closes, or before it opens the next day, find the high, low and close from the most recent day.
  2. Sum the high, low, and close and then divide by three.
  3. Mark this price on the chart as P.
  4. Once P is known, calculate S1, S2, R1, and R2. The high and low in these calculations are from the prior trading day.

Pivot Points

What Do Pivot Points Tell You?

Pivot points are an intra-day indicator for trading futures, commodities, and stocks. Unlike moving averages or oscillators, they are static and remain at the same prices throughout the day. This means traders can use the levels to help plan out their trading in advance. For example, they know that, if the price falls below the pivot point, they will likely be shorting early in the session. If the price is above the pivot point, they will be buying. S1, S2, R1, and R2 can be used as target prices for such trades, as well as stop loss levels.

Combining pivot points with other trend indicators is a common practice with traders. A pivot point that also overlaps or converges with a 50-period or 200-period moving average, or Fibonacci extension level, becomes a stronger support/resistance level.

The Difference Between Pivot Points and Fibonacci Retracements

Pivot points and Fibonacci retracements or extensions both draw horizontal lines to mark potential support and resistance areas.

Fibonacci retracement and extension levels can be created by connecting any price points on a chart. Once the levels are chosen, then lines are drawn at percentages of the price range selected.

Pivot points don’t use percentages and are based on fixed numbers: the high, low, and close of the prior day.

Limitations of Pivot Points

Pivot points are based on a simple calculation, and while they work for some traders, others may not find them useful. There is no assurance the price will stop at, reverse at, or even reach the levels created on the chart. Other times the price will move back and forth through a level. As with all indicators, it should only be used as part of a complete trading plan.

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