The Next Step

FTSE Beater

Experienced member
Hi all

I wanted to start a new thread, as this is a step away from the core basics of trading and moving onto the more advanced areas of trading. I MUST stress that the above thread contains all the skills necessary to make money.

Hope you can take something from this thread.

Pivot Points

Hi all

Pivot points are mathematically based areas of support and resistance that were very popular with <br>floor / pit traders, who didn’t have access to live charts – so they worked and traded off these numbers.

The calculations for the pivot points are:

PP = (High + Low + Close) / 3 ( high, low and close for previous day)
1st Res = 2*PP - Low
2nd Res = PP + (High - Low)
3rd Res = 2*PP + (High - 2*Low)
1st Sup = 2*PP - High
2nd Sup = PP - (High - Low)
3rd Sup = 2*PP - (2*High - Low)

Courtesy of a post by ChartMan

This website does the calculations http://www.pivotpoints.co.uk/ (although I’m not sure what Woodie’s versions are).

I find that the values for Pivot Points work best as exit signals rather than entry signals – mainly because <br>these areas usually form congestion, and I don’t like having trades open during congestion.

This is a great example of a pivot point, and it is a screenshot that I took in the week for the Eurostoxx50. <br>After a solid uptrend, price haulted around the pivot (yellow line), formed congestion and then started to reverse.

Chart courtesy of Helenqu

This was a screenshot from Thursdays trading on the Eurostoxx50 and the pivot at 2214 when<br>first tested held strong, and started a reversal move of some 25 points.

On the second test it failed only to pull price back below it. I doubt the Pivot was the only thing bringing <br>the index back below 2214, but it certainly was a factor.

The pivot was tested from the open on Friday, and the price started an uptrend until it hit the <br>1st Resistance level (green line), which lead to a consolidation pattern.

Chart courtesy of Helenqu

Once the pivot at 2181 had gone, the Eurostoxx made a steady decline, until it hit the next pivot. It <br>also formed the head of the head & shoulders pattern.

The above 4 examples were taken in the last 4 days. These weren’t charts that I had to scan back<br> for, because the pivot points work so well on the Eurostoxx and I believe them to work equally<br>well on any other index.

I wrote back in November that I didn’t believe PP’s worked, but that was because I was looking at stocks,<br> and to me they don’t have the same effect. It’s important to remember that PP’s are another <br>form of Support and Resistance – they don’t work clean every time, but what kind of S&R does?

Last edited:
The red ema in the above examples.....is it the 34ma ?

If so its interesting how the price reacts around it.

Hi Neil

Trust you to move onto the next subject (moving averages) before finishing with this one

I presume you mean the red EMA on Helenqu's chart - In which case it's the 30 EMA Low, so its the moving average of the low values. Why you didn't work that out I don't know :cheesy:

The green line is the 30 EMA High

HTH - apologies Helen if I jumped in ahead of you.

FTSE, can you edit and re-post your last chart above- its too wide...

Hi FB,

You missed a few out, here is a full list of levels that are often referred to as pivot points:

Code:
``````[b]Daily Open[/b]	Previous day’s open/can act as support and resistance in intra day trading.

[b]Daily High[/b]		Previous day’s high/potential resistance point.

[b]Daily Low[/b]		Previous day’s lowest point/potential support point.

[b]Daily Close[/b]		Previous day’s close/settlement price.

[b]Pivot Point[/b]	Previous day’s (high + low + close) /3 = Pivot Point psychologically important in next day’s Trading – breaks of pivot signify a move to lower	or higher prices.

[b]Regular High[/b]	2 x Pivot Point – Daily Low = Regular High. This is the projected upside for the next day’s Trading.  Any Early break should indicate a trend day.

[b]Regular Low[/b]	2 x Pivot Point – Daily High = Regular low – projected downside objective for the nest day’s trading.  Any early break indicates a trend day.

[b]Extended High[/b]	Pivot Point + High – Low = Extended High  - signifies a trend day.  Market must move significantly above this point to move higher the next day.

[b]Extended Low[/b]	Pivot Point + Low – High = Extended Low – signifies a trend day.  Market must close below this level to imply a change in trend.

[b]High Break[/b]	               (Previous day’s trading rage x .75) + Close = High Break.  Any break and close above this point from a new market low is an early warning signal of an Imminent change in trend.

[b]Low Break[/b]	              (Previous day’s trading range x .75) – Close = Low Break.  Any break and close below this point from a new market high is an early warning signal of an Imminent change in trend.

[b]Mid Point[/b]	              Daily High + Daily Low /2 – similar to the Pivot Point – idea is to sell or buy crosses respectively.

[b]Pinnacle[/b]	              2 day moving average of close – indicates short-term market strength or weakness.

[b]Volatility Break-out Upside[/b]         Same a High Break.

[b]Volatility Break-out Low side[/b]       Same as Low Break.``````

Not all are mathematically calculated, but are obvious support/resistance levels such as previous day lows/highs etc. Like all these things, they sometimes 'work' and other times don't - at the end of the dayit all boils down to trend/support & resistance.

Hi CM

All done - sorry about the original post.

Hi TBS

Thanks for put those up

Low Break (Previous day’s trading range x .75) – Close = Low Break. Any break and close below this point from a new market high is an early warning signal of an Imminent change in trend.

Sandy,

This formula yields a negative number. Shurely its:

Close - Previous day’s trading range x .75)= Low Break

?

Hi Les,

.. not that I use them anyway

the next step

Hi all

Pivot points are mathematically based areas of support and resistance that were very popular with <br>floor / pit traders, who didn’t have access to live charts – so they worked and traded off these numbers.

The calculations for the pivot points are:

PP = (High + Low + Close) / 3 ( high, low and close for previous day)
1st Res = 2*PP - Low
2nd Res = PP + (High - Low)
3rd Res = 2*PP + (High - 2*Low)
1st Sup = 2*PP - High
2nd Sup = PP - (High - Low)
3rd Sup = 2*PP - (2*High - Low)

Courtesy of a post by ChartMan

This website does the calculations Pivot Points Login (although I’m not sure what Woodie’s versions are).

I find that the values for Pivot Points work best as exit signals rather than entry signals – mainly because <br>these areas usually form congestion, and I don’t like having trades open during congestion.

This is a great example of a pivot point, and it is a screenshot that I took in the week for the Eurostoxx50. <br>After a solid uptrend, price haulted around the pivot (yellow line), formed congestion and then started to reverse.

Chart courtesy of Helenqu

This was a screenshot from Thursdays trading on the Eurostoxx50 and the pivot at 2214 when<br>first tested held strong, and started a reversal move of some 25 points.

On the second test it failed only to pull price back below it. I doubt the Pivot was the only thing bringing <br>the index back below 2214, but it certainly was a factor.

The pivot was tested from the open on Friday, and the price started an uptrend until it hit the <br>1st Resistance level (green line), which lead to a consolidation pattern.

Chart courtesy of Helenqu

Once the pivot at 2181 had gone, the Eurostoxx made a steady decline, until it hit the next pivot. It <br>also formed the head of the head & shoulders pattern.

The above 4 examples were taken in the last 4 days. These weren’t charts that I had to scan back<br> for, because the pivot points work so well on the Eurostoxx and I believe them to work equally<br>well on any other index.

I wrote back in November that I didn’t believe PP’s worked, but that was because I was looking at stocks,<br> and to me they don’t have the same effect. It’s important to remember that PP’s are another <br>form of Support and Resistance – they don’t work clean every time, but what kind of S&R does?

really a great thanks to this post.especially the pics it helps me alot to understand what i should understand.so keep it up.

I think patrica wins the reviving the oldest thread award.

is this thread going to continue ?

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