Pivot Point Questions

fknandrew · July 7, 2009, 9:22am

Hi Guys
Im trying to understand Pivot Points more.

First when is it considered that a level (PP, R1, S1 etc) is breached? In candlesticks, does the price have to close above the line, or is it enough that the shadow or the high or low of the day cross the line. Then, how many candles does it need to form above or below the line to confirm the trend?

Second Do we consider the shadows hitting the line and bouncing as signs of strength of the support and resistance, or does it have to be the candles open and close that bounces?

Third
If the candles are way outside the lines (as it was in USD/JPY today) where they were in a level complete of their own, what does this mean? Does this mean no trades on that day?

I tried searching the forum but didn’t see a similar thread.

Thanks!

bamafan2112 · July 7, 2009, 9:59am

And while this is on subject, I would like to ask if the same answers given about pivot points holds true for the midpoints.

daydreamer65 · July 7, 2009, 10:00am

fknandrew:

Hi Guys
Im trying to understand Pivot Points more.

First when is it considered that a level (PP, R1, S1 etc) is breached? In candlesticks, does the price have to close above the line, or is it enough that the shadow or the high or low of the day cross the line. Then, how many candles does it need to form above or below the line to confirm the trend?

The price needs to close above the line & a new candle form
above the line. This is generally the case with all S & R lines
however they may be generated, by drawing them, fibonacci etc.

Second Do we consider the shadows hitting the line and bouncing as signs of strength of the support and resistance, or does it have to be the candles open and close that bounces?

The strength of the line can be reflected in the bounce,
it can also indicate profit taking.

Third
If the candles are way outside the lines (as it was in USD/JPY today) where they were in a level complete of their own, what does this mean? Does this mean no trades on that day?

If your system says only trade when a S & R line is breached
then yes you sit on your hands & wait.

I tried searching the forum but didn’t see a similar thread.

Thanks!

Take a look at the webpage below for more information on
Pivot Point Trading

fknandrew · July 7, 2009, 8:59pm

Thanks for the answers!

Just a few clarifications:

When you say new candle form, it does not necessarily mean that that candle has closed?

Again thanks for taking time for this!

daydreamer65 · July 7, 2009, 9:25pm

No it does not need to close, just open above/below the S/R line.

fknandrew · July 8, 2009, 9:35pm

Thanks!

I guess I’ll place my next question here as well. Im looking for a Pivot Point Indicator for Metatrader. The current one I have removes the lines from the previous day’s calculations once a new day started. Im looking for one where the old lines remain so I can study how the market reacted in prior days. Would anyone know of such a file? Thanks!