Pivot Points Strategy

Pivot points can be used as entry points for new trades or as a close signal for the existing ones.

There are different types of pivot points with a different mathematical formula or simply using previous highs and lows.



HOW TO TRADE PIVOT POINTS
The following scenarios work with the Traditional Pivot Points
For the Camarilla version normally R and S are closer to the price and we use a different setup.
Trading setup #1 (Not so strong trend): Open price is between R1 and S1
Long when the price moves back above S1 after going below S1. Target will be P, R1, R2, .. levels.
Place Stop loss at the S2 level

Wait for the price to go above R1 and then when it moves back below R1 again, go short.
Profit target will be P, S1, S2 S3 levels and stop-loss above R2
Trading setup #2 (Normally very trendy bullish markets): Open price is between R1 and R2
Buy or go long when the price moves back above R1 again after going below R1. Target will be R2,
Place stop loss at R1

Wait for the price to go above S1 and then when it moves back below S1 again, sell or go short.
Target will be S2 levels, and the stop loss will be above P.

Trading setup #3 ( Very trendy bearish market ): Open price is between S1 and S2
Wait for the price to go above S1 and then when it moves back above S1 again, then go long.
Target will be P, R1, R2 levels, and stop-loss below S2.
Wait for the price to go below S4 and then when it moves below S2, go short.
Place stop loss above S1.

Trading setup #4 (High probability for a trend reversal or correction): Open price is above R2
Buying can be risky at this level. Wait for the price to go below R2.
As soon as the price moves below R1. go short.
Place stop loss above R3. Target S1, S2, or P

Scenario #5 (High probability for a trend reversal or correction): Open price is below S2
Selling could be risky at this level as the price has opened with a big gap down.
Wait for the price to go above S1.
When the price moves above S1, buy
Place a stop loss of S2. Target R1, R2, and P.