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Thread: Indicator Classic Pivot Points

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    Indicator Classic Pivot Points

    Classic Pivot Points indicator is a bunch of Support and Ressistance lines, the main ones named Support 1, 2 and 3, Pivot Point, Resistance 1, 2 and 3 (seven lines). Those lines' value lasts for a day and are calculated based on the previous trading day's High, Low and Close prices.
    There is more than one way to calculate Pivot Points - we are focusing on the Classic one. This is Pivot Point being (High+Low+Close)/3; Range - High-Low; Support 1 is 2*PP-High, Resistance 1 is 2*PP-Low; Support 2 and 3 are PP-R and PP-2*R; Resistance 2 and 3 PP+R and PP+2*R.
    Other approaches include PP = (H+L+C+O)/4; PP=(H+L+2*C)/4; Support 1 being a Fibbonachi number of Support 2 and/or Range; Standart Deviation etc. etc.
    There are multiple indicators around calculating these, some platforms like NinjaTrader and TradeInterceptor have them included, some brokers provide custom indicators - it doesn't matter where we take them from - as long as the calculations are the same it is Classic Pivot Points.

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    One more example, where we might see how it is better to use the Classic Pivot Points mainly for planning our exits and must be more carefull when entering around them. 14:30 on the platform is major news release time (8:30 or so American).

    http://i.imgur.com/RU9pb6X.png

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    Pivot Points are used for other things also - like moving averages and creating envelopes similar to the Bollinger bands. This includes other kinds of Pivots also, not just the Classic - Camarilla, DeMark's and others. Charles Drummond's 'Point and Line' technique a.k.a. 'Drummond Geometry' is also based on Pivot Points.

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    If a wide and comparetively longer time trading range is formed on currency markets during a major news release we most often should want to know where the Classic Pivots are, as these tend to participate as trading levels in such ranges.
    Such range would consist of 2 to 4 big sharp moves from one boundry to the other lasting 10-30 minutes each, the active period of the range would last a few hours in most cases.

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    If such range happens it is good to redraw the support/resistance zones based on price action that are close to the Pivot levels as there might be a few pips difference and most of the time the price action levels are better to base trades on. But that should be individual for every such situations, as it doesn't really occure so often (such range is common for one market 5-10 times per year or so).

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    This is the Classic Pivot Points on the Oil market today - it is a holiday in most of Europe and the USA, but Oil market is still working, on less volume though.

    http://i.imgur.com/c3TT7hw.png


    This is what we can get from Classic Pivot Points most of the trading days where there is no big trend.

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  7. #16
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    I think that the using of the indicator may be guided of of some of the rules or conditions and the tools may be so good at knowing some of the charts characteristics . also we have to seek for many reasons of the trading like the using of the other theories in combination of them together

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    Absolutely correct - Classic Pivot Points by itself is not enough to base a trade, it can only be implemented as an addition into an already made-up strategy with rules for entry and at least a hints for exit. Best use is to watch for exit around the Classic Pivot levels and for this particular thing an already opened position is needed. While Classic Pivot Point have meaning in the market and chart for daily trends and volumes to implement them in our strategy demands more than this.

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    I think that the pivot is a very good tool to be used to divide the charts according to a very smart way into levels of support and resistance . all of these levels can be used in a very good manner . so the trading strategies may contain a lot of these lines and the development of them most of the times .

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    On a level-2 platform it should be better visible what is happening around pivot point levels. I don't have access to such thing for now, but if someone has and trades on this level-2 information it should explain a lot of things.
    Again - I can't stress this enough - pivot points are not ordinary support/ressistance levels, but a higher liquidity zones - they attract the price, don't repel it. This is crucial - it makes all the difference between profitable and non-profitable use of pivot points.
    And, of course - the markets. Pivot points work only on major markets with a lot of actual trading/exchange (not just speculative) volume - oil, gold, intercontinental major currency crosses. If you put pivots on DAX or EURCHF it will not work.

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    Quote Originally Posted by hosny55 View Post
    I think that the pivot is a very good tool to be used to divide the charts according to a very smart way into levels of support and resistance . all of these levels can be used in a very good manner . so the trading strategies may contain a lot of these lines and the development of them most of the times .
    Yes sir those pivot points can be used in many ways, those can be used for reversal, or as your support and resistance points. So many trader's use them in intra day trading to close their trades. I keep any eye on intra day pivot points mostly because as a intra day trader they are very important for me in trading. This is a good technical way of trading, and glad to see that thread creator is still active in this thread, I think he deserve pro membership now.

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