Pivot Point Trading - The Strategy

Pivot points are considered a technical indicator based on the average prices over the past few days or weeks. We present a trading strategy.

Pivot points are a well-known technical indicator that is based on the average prices over the past few days or weeks. In the first part, we presented the indicator, which was already used by pit traders, in detail. The function of pivot points is to display price ranges that indicate a change in the demand-supply constellation. These areas are therefore considered either resistance zones or supports.

In addition, we have also pointed out that the disadvantage in trading pivot points is that markets have become more volatile in recent years, and support and resistance can generally be identified less precisely. Of course, this makes trading on a short-term basis more difficult, because points are points and areas are areas. This fact requires three things:

  1. Traders incorporate their experience.
  2. Traders use other indicators as confirmation.
  3. Market participants do not look at daily pivots, but calculate the points on a weekly basis.

For beginners, only the second and third options are possible. We would like to present a strategy that combines these two points.

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Pivot points on a weekly basis

The two following charts are each intended to pivot - Display points on a daily and weekly basis.

The following is immediately evident in the current chart for the DAX future: The pivot point on a daily basis has already been pointing downwards happens. This led to dynamic sales on a short-term basis. On a weekly basis, however, the pivot point was 11,839 points, and thus the PP is still below the current quotation at 12,000 points.

On closer inspection, it can be seen that the dynamic increase that has occurred in the last Days took place at exactly that pivot point. The trader therefore asks himself the question: When is the current upward movement now at risk? After the daily or weekly pivot point has passed?

In our view, it is the weekly pivot point, because the dynamics and volume that went with the increase are significantly higher than that Breakthrough of the daily pivot point. So we have completed the first part of the analysis and are therefore still bullish for the DAX futures price.

Trading with pivot points in just 5 steps

Who trade binary options and that If you want to try trading with pivot points, you will find all relevant information clearly displayed in the following slideshow. We have briefly summarized what really matters when trading binary options and how traders can get to the first trade in just five steps.

Pivot Point Trading - The Strategy

Confirmation by the CCI indicator

In addition to that MACD or momentum, the CCI (Commodity Channel Index) is a popular indicator from the family of trend-confirming indicators. Although the indicator has its origin in the commodity futures market, it can still be used for all values.

The calculation of the indicator is very simple:

  • Calculation of an average price (high + low + Close / 3)
  • Calculation of a moving average (period 14)
  • Calculation of the difference between average price and GDL

In this way the CCI indicator shows whether a trend is developing well or is weakening. Experience has shown that traders can also work with trend lines when analyzing indicators.

Another look at the first chart shows directly that the CCI indicator has also passed the downward trend. This is another indication that the market remains bullish while it is already bearish based on daily pivot points. In summary, traders can approach the strategy according to the following points:

  1. Identification of the weekly pivot points in the 1-hour chart.
  2. Comparison with the CCI indicator.
  3. If the entry has already been made, the trend continues to be confirmed, provided the weekly pivot has not passed and the CCI continues to point in the direction of the trend.
  4. If no entry has yet been made, this can be done immediately Break of the weekly pivot point can be searched, provided the CCI also generates a signal.

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How to use pivot point "investing" to trade on iq option

Conclusion

Nobody can predict with absolute certainty whether the DAX index future will continue to rise. With the help of market technology and indicators such as the pivot points and the CCI, reliable trends can be analyzed. It should be noted that pivot points, which are calculated on the basis of prices from the past week, provide better signals than the daily pivots. Incidentally, this also applies to the use of charts based on minutes and hours (see above).

Customers of the broker Anyoption also have the option of trading this strategy on the go.

Pivot Point Trading - The Strategy

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