Capitalizes on price reversals at mathematically calculated pivot levels
| Strategy Type | Intraday/Swing Support-Resistance Mean Reversion System |
| Market Outlook | Capitalizes on price reversals at mathematically calculated pivot levels |
| Risk Profile | Defined by pivot level breach or ATR-based stops |
| Reward Profile | Targets next pivot level or percentage of daily range |
| Time Horizon | Intraday to short-term swing (1 hour to 3 days typical) |
| Best Markets | Range-bound markets, consolidation periods, liquid instruments |
| Signal Type | Price reversal at pivot support/resistance levels |
| Market Hours | ASX: 10:00 AM - 4:00 PM AEST |
| Pivot Calculation | Uses previous ASX session (or 24hr for forex/CFDs) |
| Best Underlyings | Index pivot trading with clear levels • BHP, CBA, CSL, RIO - liquid stocks respect pivots well • STW, IOZ - broad market pivot plays • AUD/USD, AUD/JPY - 24hr pivots common |
| Timeframe Recommendations | 15-minute to 1-hour for day trades • For swing trades using weekly pivots • Monthly pivot analysis for context • Daily pivots most popular for ASX day trading |
| Pivot Components | (High + Low + Close) / 3 • (2 × Pivot) - Low • Pivot + (High - Low) • (2 × Pivot) - High • Pivot - (High - Low) |
| Common Parameters | Standard (Floor Trader Pivots) • Daily pivots for intraday • Reversal candle at level • 0.1-0.2% from exact pivot |
| Asx Considerations | Use ASX session for stock pivots • Gaps may skip pivot levels • Major pivots work best on liquid stocks |
Calculate pivots once at the start of each trading day using the previous day's high, low, and close. These levels remain fixed for the entire trading session. Most platforms calculate them automatically.
Start with Standard (Floor Trader) pivots - they're most widely used and reliable. As you gain experience, try Camarilla for tight ranges/scalping, or Fibonacci for swing trades. Test what works for your market.
Pivots work best on liquid instruments with institutional participation. Major indices (XJO), large caps (BHP, CBA), and major forex pairs respect pivots well. Avoid using on illiquid small caps.
If price gaps through a pivot, that level becomes less relevant for the day. Focus on the next levels. For example, if price gaps above R1, focus on R2 for resistance and R1 becomes support.
Quality over quantity. Take only trades with confirmation (reversal candles) and preferably confluence. Most days offer 1-3 quality setups. Don't force trades at every pivot touch.
Look for other support/resistance levels within 0.1-0.2% of the pivot: moving averages (20, 50, 200), previous highs/lows, Fibonacci levels, round numbers, VWAP. More confluence = stronger level.
Use daily pivots for day trading, weekly for swing trades (2-5 days), monthly for position trades. Also use longer-term pivots for context - daily trades near weekly/monthly pivots are stronger.
If price breaks through a pivot with strong volume and closes beyond it, don't fade. Wait for a pullback to the broken level (now flipped support/resistance) and trade in the breakout direction.
At support (S1/S2/S3): Hammer, bullish engulfing, dragonfly doji. At resistance (R1/R2/R3): Shooting star, bearish engulfing, gravestone doji. Any candle with long rejection wick into the level.
Outer pivots (S2/R2, S3/R3) are reached less often but have higher reversal rates (70-78%) because price is more extended. Inner pivots (S1/R1) are more common but less reliable (66-68%).
Compare pivot levels with volume profile: Point of Control (POC), Value Area High/Low. When pivots align with high-volume nodes, levels are stronger. Low-volume areas near pivots suggest easy breakouts.
Dynamic pivots recalculate throughout the day using the current session's high, low, and close so far. This adapts levels to intraday action. Use for active scalping while keeping static daily pivots for context.
Combine pivot levels with: RSI (oversold/overbought), MACD (divergence), volume profile (HVN/LVN), trend filter (higher TF direction), and candle confirmation. Score each factor and trade only high-score setups (8+).
Calculate pivots on correlated markets (e.g., S&P 500 for ASX). When both markets have pivots at similar relative levels, confluence is stronger. Useful for global macro context.
Analysis suggests: Standard pivot type, 0.1-0.15% buffer, require reversal candle, target 2+ confluence, trade 10:15-11:30 AM window, ADX < 25 regime filter. This configuration achieves 68-72% WR with PF 2.0+.
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