Pivot Point Indicator does not criticize just lazy. They represent the levels of resistance and support, at which a trend reversal is likely to occur. Instruments built on Pivot points are similar to channel indicators. Potential pivots are connected by a line forming a flexible channel within which the price moves. But if you use different services for the same currency pair, which provide calculation for Pivot points, the numbers will be different. Who to believe? Only to myself.
Strategy based on Pivot point indicator
The Float Pivot indicator has a significant difference from other channel tools: the boundaries of the channel are based on calculated points, and not on actual historical data. It clearly shows breakouts and rebounds, there is a slight smoothing by averaging the closing price used in the calculation. Low indicator period is not recommended.
Options for constructing strategies based on the Pivot point indicator:
- opening a position when lines are broken through and the price leaves the channel;
- trading on a rebound from the channel borders, subject to a long price movement inside it.
The principle of trading is similar to working with Bollinger bands, only the indicator formulas are different. Which is better – there is no single answer.
The Float Pivot indicator used in the proposed strategy displays the Pivot level channel built on the calculation: reference center, primary resistance and support levels. Trade will be conducted according to the second principle – on reflection from the channel borders.
- timeframe – M15;
- asset – EUR / USD;
- indicator period = 100.
No other settings. Conditions for opening a long position:
- after closing, several candles were located under the blue line. Allowed and similar arrangement of one candle;
- The price line has crossed the reference line (green).
As soon as the price touches the green baseline, we open a deal with a stop of 10-30 points. Close the position when the price touches the red line (the upper level of the channel).
With a short position, the situation is opposite: the first condition is that the candles should close above the upper level of the channel. The second condition regarding the price crossing of the reference line is preserved.
The Pivot point indicator can be interpreted in different ways. For example, if the channel is wide relative to previous periods, then you may not have to wait for the touch line, open a deal earlier. Similarly, with the closure – if a flat is scheduled, then it is not necessary to wait for the opposite border to touch. It makes sense to look visually how the price behaved in past periods and select a currency pair and timeframe, as well as convenient entry points. There are questions – write them in the comments!