SHEL Pivot Points Strategy

Pivot points are calculated support and resistance levels based on previous period's High, Low, and Close. Classic formula: PP = (H+L+C)/3. From PP, support levels (S1, S2, S3) and resistance levels (R1, R2, R3) are calculated.

PP determines daily bias. Price above PP = bullish bias, favor longs. Price below PP = bearish bias, favor shorts. PP also acts as a magnet - price often returns to PP during the day.

At support (S1/S2): wait for price touch, look for bullish reversal candle, enter long, stop below level with buffer, target next pivot up. At resistance (R1/R2): opposite approach for shorts.

Valid breakout needs: price CLOSING beyond level (not just wick), above-average volume, and continuation (not immediate reversal). Failed breakouts quickly return back through the pivot.

Daily pivots for day trading and short swings. Weekly pivots for swing trading context. Monthly for major levels. Use multiple timeframes - confluence between timeframes creates stronger levels.

Same PP calculation, but support/resistance use Fibonacci ratios: R1/S1 = PP ± (0.382 × Range), R2/S2 = PP ± (0.618 × Range), R3/S3 = PP ± (1.000 × Range). Popular with swing traders.

Plot multiple pivot types (classic, Fibonacci) and timeframes (daily, weekly). Where levels cluster = confluence zone. Daily S1 at weekly PP is strong confluence. 3+ levels = high probability zone.

Check oil's pivot position. Shell at S1 + oil above its PP = valid long bounce. Shell at S1 + oil breaking down = may break S1 (skip). Energy context determines if pivot will hold.

Intraday pivots with tighter levels. H3/L3 define expected range - sell H3, buy L3 for range trading. H4/L4 are breakout levels - price beyond indicates trend day. Best for scalping/day trading.

They provide major context. Monthly PP is major trend pivot. Weekly PP is swing bias. Trade daily signals more confidently near weekly/monthly levels. Higher timeframe pivots = more significant.

Calculate PP, R1-R3, S1-S3 from previous period. Signal logic: Bounce = price at level + reversal candle + volume. Breakout = close beyond + volume spike. Filter with oil pivot position. Target next pivot level.

Buy calls at S1/S2 (defined risk bounce), puts at R1/R2. Use iron condors (sell spreads at both pivots) for range days. Match DTE to pivot timeframe (14-21 DTE for daily, 30-45 for weekly).

Track holding vs breaking for each level. Strong level holds 70%+ of tests. Weak level fails often. Adapt strategy - trade bounces at strong levels, expect breaks at weak levels. Update analysis weekly.

Broken levels often become opposite: R1 breaks and becomes support, S1 breaks and becomes resistance. Yesterday's broken R1 may retest as today's support. Track role changes for better entries.

Per-trade: 2% risk. Total Shell: max 5%. Total energy: max 10%. Max concurrent: 3 pivot trades. Track by level (S1, R1, etc.) and type (bounce, breakout). Compare to benchmark for strategy value.