Pivot Points, R1/S1, and Previous Day High/Low Strategy

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We’ll explore effective trading strategies utilizing pivot points, support and resistance levels (R1/S1), and the previous day’s high/low. These strategies can help you identify potential entry and exit points in various market conditions.

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Trading Overview:

  • Bullish Setup:
    • Check both the 5-minute and 1-hour charts for CPR (Central Pivot Range). If price is above CPR in both charts, it’s bullish—go long.
  • Bearish Setup:
    • Check both the 5-minute and 1-hour charts for CPR. If price is below CPR in both charts, it’s bearish—go short.
  • CPR Trends:
    • Higher High CPR: Bullish trend.
    • Lower Low CPR: Bearish trend.

Direct Trading Setup:

  1. First Three Candles Strategy:
    • If the first three 5-minute candles are above R1 and green, go long.
    • If the first three 5-minute candles are below S1 and red, go short.
  2. Breakout Setup:
    • If the first candle breaks R1 and the previous day’s high, go long.
    • If the first candle breaks S1 and the previous day’s low, go short.
  3. Sideways Market Setup:
    • If the first three 5-minute candles stay on CPR, expect sideways movement.

Virgin CPR Strategy:

  • If the previous day’s price action did not touch the CPR, it’s called a Virgin CPR.
  • The next day, the previous day’s CPR level often acts as a reversal point.

Reversal Setup

  1. R1/S1 Reversal:
    • If the candle opens above R1 and is red, it will likely reverse and get attracted back to that day’s CPR levels.
    • If the candle opens below S1 and is green, it will likely reverse and get attracted to that day’s CPR levels.
  2. Failure to Break:
    • If the first three 5-minute candles are between CPR and R1 and the price attempts but fails to break the previous day’s high / R1, expect a reversal back towards the CPR levels.
    • If the first three 5-minute candles are between CPR and S1 and the price tries but fails to break the previous day’s low / S1, expect a reversal back towards CPR.
  3. Immediate Reversal:
    • If the first three 5-minute candles open above R1 or below S1, expect an immediate reversal towards CPR.
  4. Range-bound Day:
    • If the first three 5-minute candles are between CPR-R1 or CPR-S1, expect a range-bound market day until R1/S1 or the previous day’s high/low is broken.

By effectively utilizing pivot points, R1/S1 levels, and the previous day’s high/low, you can develop robust trading strategies. Remember to combine these techniques with other forms of analysis and always practice risk management.