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A pivot is formed from a candle body, not at the high/low price associated with a wick.
A pivot is broken when 2/3 of the candle body breaches it to the upside or downside.
Few pivots function like this and an indicator like this is mandatory if a trader is to avoid trading into support or resistance.
In the JPEG above, the dark black box shows a system generated long entry signal.
But the trade would take place right into a pivot (red dashed line).
Price hits point “A” at the pivot and bounces down (would have caused a stop out)
The pivot breaking candle “B” has its candle body 2/3 through the pivot to the upside.
The trade, taken will little risk goes 35 ticks.
The break in the pivot is oftentimes associated with a POP in price as the residual short traders in the pivot get stopped out.
At Right Line Trading we trade with a methodology that works day after day.
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