How Markets Move: GBPJPY
If you don’t currently use Pivot Points in your trading, you may want to consider integrating them into your trading plan. In the chart below we apply the Weekly Pivots to our 60 minute chart, and are shown a straightforward trend trade last night at the confluence of the most recent trend line and the Weekly Central Pivot.
What’s fascinating about about watching set-ups like this unfold is how little the trader contributes. You are just there to initiate the trade and set the stop — in other words the trader’s job is to NOT think, to follow his plan, and to NOT mess it up.
On the 15 minute chart where we would use Daily Pivots both GBPJPY & EURJPY bottomed right on Pivot S1, which is text book price to Pivot Point behavior.
The most interesting part of the set-up and trade would have been had you chosen to get short just ahead of the first test of that Weekly Central Pivot, which would certainly have been acceptable, before the buy signal we’ve highlighted.
Jay Norris
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I agree that Pivots are an excellent tool and are always used by professional traders. The weekly pivot plotted on the 60m chart and Daily pivot on the 15m or less charts are a key to a trader’s success.
By looking at your longer time frames to determine what the Trend is, then using Pivots hand-in-hand with trend-lines work really well.
If the market is trending UP, then look for Long trades above the Pivot with stops below it. I find stops below the most recent dips AND below the Pivot are prudent. An excellent example is above!
And the opposite is true IF the trend is Down in the longer term time frames. ie. Short below the Pivot and stops placed above it, ideally above the most recent peak above that pivot.
Still it is true of what is said above; that there is little a trader needs to contribute, except to follow the plan and not too think too much about it.
Ninja Trader has excellent built-in Pivots. However, S3 and R3 are way too wide. But if anyone wishes to use exactly the same Pivots as Jay uses (and the correct R3 and S3) then go to the Ninja Trader’s forum and you will find the correct calculations. The link is:-
http://www.ninjatrader-support2.com/vb/showthread.php?t=17966