Simple Forex Pivot Points Strategy
Newb May 15, at
Show Daily, Weekly and Monthly Pivot levels on your chart.
Pilot level can even be acceptable to be used as stop loss, profit target, exit or entry depending on the current situation in the market. Typically, a trader will purchase once the market touches the support level and once it reaches the resistance point the probability is on selling. However, this commonly used strategy is basically dangerous during intensely trending markets. The best way to use forex pivots points is to treat them as indicator of the actions in the daily basis.
If the price is underneath the pivot, the market is expected to decline. In contrary, if it goes above, then expect a strong market. Doing this, you can assure that the first resistance or support can become indicator of a probable action that will lead to a trading that goes in the similar trend direction.
This strategy can turn to whipsaws especially if there is low instability. Nevertheless, this is generally the safest strategy that can be used. Just like any signal or indicator, whether manually or automatically calculated cannot become a fully guaranteed indicator, which sometimes may fail you, but as for its purpose, it will always be good to have them even if you are not using trading system based on pivot points. If the pivot day shift results in data appearing on Sunday, it was really Monday where it occured, so the indicator treats it as Monday.
It uses an indicator buffer for each line, so pivot levels of previous days remain visible. This has a negative consequence: This indicator can be applied to any chart period, although daily pivots on charts with long periods are meaningless. Sorry for the mistake: This code of Parabolic SAR doesn't make the errors when working together with the same second indicator located on the same chart.
The number of lines is variable max 6. If the candle that performs the bounce closes high up above the pivot support, then it would be wise to allow a slight pullback to the line before initiating the long entry. Stop Loss for Long Entry: Knowing when to exit a trade is key and this can be achieved as follows: The next pivot line above the pivot support the yellow pivot is the nearest TP point. This is the situation seen on the chart.
Usually, price would have been rejected at the pivot resistance line. Once this occurs, you can initiate a short trade at the open of the next candle. Naturally, the first pivot line below the resistance pivot should be used as the Take Profit.