Pivot point trading strategy to get profitable results – The Dairy Of a Trader

Which is the best pivot point strategy? Find out the most effective pivot poin strategy to trade with and get profitable trading results!

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The best pivot point strategy – a simple, but effective guide

Hello everyone! So, today, we are going to go over a strategy, which reviews trading big or key levels in Forex. So, this strategy is not really a strategy, that is only connected to one trading method, meaning we’re not only talking about trend lines, about horizontal supports or resistances, about Fibonacci levels, about moving averages, or other methods. More or less, what we are looking at is using all of these before mentioned methods to identify, on a chart, a key or a big major level that is going to play a major role in defining the price action. So here, to start with, I have prepared a few charts. 

Let’s start with the Dollar/Cad. First, what is important to note, is that this strategy is best working on daily and weekly charts since, again, we are talking about big levels and you cannot truly identify a big level on an hourly chart, because the time frame is too low. So, here, we are talking about a daily chart, in this particular case, and we have like a triangle with two big trend lines. You can see here that this trend line is connecting a low from 2014 and then a low from 2017. Here, again, the high from 2016 and the high from 2017. So we are talking about a multi–year trend line. In this case, we know that the trend line can be drawn as soon as it can connect two lows or two highs. Upper side, we have two highs, which means that on a daily level, when we draw a trend line connecting two highs, then we can look for a third touch, which would be, of course, a big level, since it’s a daily level and we are here talking about if… When the price touched the trend line here, it happened in 2018, so it’s a two-year trend line, which, of course, is going to offer a resistance. On the downside, we have, again, a third touch to the trend line and this is, again, a four-year trend line, so this is even stronger. Of course, the longer the time frame is, the more important the trend line is. On some charts, you’ll find also trend lines or horizontal support and resistance lines that are for eight or ten years active. 

So, here, as you can see, you have two big levels. We are talking about multi-year levels in what we have here. So you have a second touch, you will draw a trend line now, we’re waiting for a third touch and when the price comes here, in this particular moment, we are talking about 1.2250. So, you are entering buy trade, because you’re looking for to join many big real money traders who are looking to buy against the trend line and look at the reaction, almost vertically reach from 1.2250 to almost 1.27, which is a 450 pips from this level, almost not even peaking below the trend line. So, your Stop-Loss which, at this time frame, we are talking about a daily and weekly timeframe, we advise to be at least 50 Pips since you’re also looking to hit bigger levels, then we’re talking about 100-150 pips, that all depends on your trading plan. So, we go to the upside and we have a third touch to the upper side of the triangle. And then, what happens again, you enter sell, bid literally as you can see here on the daily chart, we simply touch in a peaked trend line at 1.3125, and then we go almost straight line, 300 Pips to 1.2820, before having a minor correction and then, again, continue to the downside. So, you can see that the traders were really looking to sell against this trend line and buy against this trend line because they have identified these two levels as weak levels. This is when we talk about trend lines. Let’s see, here again, very similar trend lines. You see upper trend lines here. We draw a trend line connecting these two highs or these series, or these highs here, and then here. We actually start thinking about entering into the trade. You can see, here, we have one reaction, second reaction, we go down here another reaction. Look at the number of touches. All in all, we are talking about ten touches against this trend line, which is a key major bear line in the Dollar/Yen on a daily chart and just trading against this trend line, we could have made a lot of money without really going into very advanced moves or thinking anything big.  

Let’s see, when we talk about the Fibonacci charts here. We have, again, on a daily chart in the Pound/Dollar, we have a retracement. This is a Brexit candle, of course, because it’s a 2000 pips candle, daily candle. So, we retrace, we went from 1.50 to 1.19, 3100 pips. Then what happened? When you draw the Fibonacci retracement lines, you see that we reacted to certain levels in certain ways, but the big reaction, which happened, is 78.60. Those investors were trading pound/dollar. They know that a reaction from pound/dollar at 78.60 is not an accident, it really likes this level. So, what happened is that if you go and zoom in/out this chart, look, this was more or less like sideways trading. You can see here choppy price action, but then, suddenly we set in from 1.3450 and then we go to 1.4350, so 900 pips. We have a big vertical move to the upside. We touch this 78.6 and then we go down and the first reaction to the downside is a reaction of 350 pips. We go up, we create a lower high, we go down to 261.8 retracement. But, what’s for us? What is important in this particular case is the reaction that we got here. So, as soon as we have such rejection at this level, see, we have this trend line, this horizontal resistance line, we are ready for the second touch if we can get one in order to sell against it. So, here we are selling. We get a second touch, again, 1.4350, we sell it, since it’s a daily chart, we’re looking for, as I said, at least 50 but more or less 100 Pips Stop-Loss. The price peaks around 30 Pips above the horizontal resistance line, but then it creates an unbelievable move, a 1000 pips move from 1.4372 to, eventually, 1.30. Again, 900 pips move. So here we make a nice trip. We went up, down, up again, second rejection. And of course, this also is a double top trading since we have two equal highs. So, we review the trend line, we review the Fibonacci and look at the moving average.  

This is a weekly chart Euro/Dollar, as we said, the higher the time frame, the more important the levels are, and look what happens, when the Euro/Dollar, it went above in the big move, a couple of years ago. It went way below the 100 moving average on a weekly chart and then look at what happened the first time we retested the moving average. So, we touch it at 1.16, we went to 1.097, 100 pips. We had a series of touches here. You can see here, we tried to close above, we failed, eventually, we came down. Touch again, fail, eventually come down. Of course, here it is was a choppy trading, because we went to 70 Pips. I’m sorry, this is 160 pips above the trend line. So, here you probably stopped out, but eventually what is important here that the close, or even if you waited for this candle to be formed at this week, and you entered your trade here, at 1.0830, you could have still made a lot of money, because the price would not simply close above the 100 weekly moving average and subsequently we went and pushed above the price. But look, we are talking about six or seven touches. By that time you already could have made a lot of money by trading these moves. 

 

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