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Pivot Point Price Action Strategy

Intraday and short term traders deploy Pivot Points as a form of support and resistance level when trading.

Many of the same rules that apply when trading other types of support and resistance trading techniques are applicable when trading pivot points.

Our forex strategy is dependent on price action around the main pivot point.

Chart Setup

MetaTrader4 Indicators: MACD Trend Candles v3.ex4 (default setting), MACD.ex4 (default setting), PivotWeekly.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following indicator or chart pattern gets displayed:

  1. If price breaks above the goldenrod main pivot point level of the PivotWeekly indicator, it is a bullish push. Also the yellow/blue filled candles of the MACD Trend Candles v3 custom indicator above the goldenrod main pivot point level denotes a buy signal i.e. a trigger to go long on the currency of focus.
  2. If the silver histogram and red line of the MACD indicator breaks and stay above the 0.00 level, then price is said to be bullish i.e. a signal to go long.

Stop Loss for Buy Entry: Place stop loss 2 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following holds true:

  1. If price breaks below the goldenrod main pivot point level of the PivotWeekly custom indicator or if the color of the MACD Trend Candles v3 custom indicator turns red/dark green during a buy signal, an exit or take profit is advised.
  2. If the red line/silver histogram of the MACD indicator aligns below the 0.00 level during a buy signal, it is an indication of weaning bulls power, hence an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following rules or conditions gets displayed:

  1. If price breaks below the goldenrod main pivot point level of the PivotWeekly indicator, it is a bullish push. Also the red/dark green filled candles of the MACD Trend Candles v3 custom indicator below the goldenrod main pivot point level denotes a sell signal i.e. a signal to sell the pair of interest.
  2. If the silver histogram and red line of the MACD indicator breaks and stay below the 0.00 level, then price is said to be bearish i.e. a signal to go short.

Stop Loss for Sell Entry: Place stop loss 2 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following holds sway:

  1. If price breaks above the goldenrod main pivot point level of the PivotWeekly custom indicator or if the color of the MACD Trend Candles v3 custom indicator turns blue/yellow during a sell alert, an exit or take profit is advised.
  2. If the red line/silver histogram of the MACD indicator readjust to form above the 0.00 level during a bearish signal, it is an indication of halting bears power, hence an exit or take profit is recommended.

Sell Trade Example

Fig. 1.1

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About The Trading Indicators

The MACD is an oscillator that combines the Fast EMA (12), Slow EMA (26) and the SMA (9) in one technical study.

Developed by Gerald Appel in 1979, Mac D, as it is also called is a common and multipurpose tool deployed in identifying and following strong trends, and also spotting trend reversals.

The PivotWeekly.ex4 custom indicator is a technical tool that automatically plots weekly pivot levels on the activity chart.

The MACD Trend Candles v3.ex4 is a modified Moving Average Convergence Divergence indicator that colors the candles to depict market trends.

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