Manchester City Trading Sessions: Timing Your Forex Mining Strategies

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Manchester City Trading Sessions: Timing Your Forex Mining Strategies – For many years, traders and market makers have used pivot points to determine critical support and/or resistance levels. Pivots are also very popular in the forex market and can be very useful tools for range traders to identify entry points and for trend traders and breakout traders to identify key levels that need to be crossed to qualify as a trader on the move. to break out.

In this article, we explain how pivot points are calculated, how to apply them to the forex market, and how to combine them with other indicators to develop other trading strategies.

Manchester City Trading Sessions: Timing Your Forex Mining Strategies

Manchester City Trading Sessions: Timing Your Forex Mining Strategies

By definition, a pivot point is a point of rotation. The prices used to calculate the pivot point are the high, low and closing price of the security in the previous period. These prices are usually taken from the stock’s daily charts, but the pivot point can also be calculated using information from the hourly charts. Most traders prefer to take pivot points as well as support and resistance levels off the daily charts and then apply them to the intraday charts (ie hourly, every 30 minutes or every 15 minutes). Using price information from a shorter time period to calculate the pivot point reduces its accuracy and significance.

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From this pivot point, support and resistance levels are then calculated, which are outlined in the formulas below.

It is common practice to calculate two levels of support and resistance, but it is not unusual to derive a third level of support and resistance. (

Note: Tertiary support and resistance are a bit too esoteric to be useful for trading strategies.)

It is also possible to delve into the analysis of turning points; For example, some traders go beyond the usual support and resistance levels and track the midpoint of those levels as well.

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A pivot point is generally viewed as a primary support or resistance level. The following chart is a 30-minute chart of the GBP/USD currency pair, with pivot levels calculated from the high, low and close of the day.

This chart shows a typical day in the forex market. The price of a major currency pair (GBP/USD) tends to fluctuate between the support and resistance levels identified in the pivot point calculation. The circled areas on the chart illustrate well the importance of a break above these levels. Image by Sabrina Jiang © 2021

The FX market has three market openings: the US opening, which occurs at approximately 8:00 AM EDT, the European opening, which occurs at 2:00 AM. EDT and the Asian opener, which takes place at 7:00 p.m. EDT.

Manchester City Trading Sessions: Timing Your Forex Mining Strategies

When trading the FX market, we also see that the trading range of a session is usually between the pivot point and the first support and resistance level, as many traders play this range. In the USD/JPY chart below, you can see in the circled areas that prices initially held within the pivot point and the first resistance level, with the pivot point acting as support. Once the pivot point was broken, prices moved lower and remained mostly within the pivot point and the first support zone.

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This chart shows an example of support strength and resistance calculated using pivot calculations. Image by Sabrina Jiang © 2021

One of the key points to understand when trading pivots in the FX market is that breakouts tend to occur during one market open. This is due to the immediate influx of traders entering the market at the same time. These traders go into the office, see how prices traded overnight and what data was released, and then adjust their portfolios accordingly. During quieter periods, such as between the US close (4:00 p.m. EDT) and the Asian open (7:00 p.m. EDT) (and sometimes even during the entire Asian session, which is the quietest trading session), prices can range for hours. a pivot level and either a support or resistance level. This creates an ideal environment for option traders.

Many strategies can be developed using a pivot level, but the accuracy of using pivot lines increases when Japanese candlestick formations can also be identified. For example, if prices traded below the average pivot point (P) for most of the session and then rose above the pivot point while creating a reversal formation (such as a falling star, Doji, or hanging man), you can sell short in anticipation of price continuing to trade below the pivot point.

A great example of this is below, the 30 minute USD/CHF chart. USD/CHF stayed between the first support zone and the pivot level for most of the Asian trading session. As Europe entered the market, traders started to rally USD/CHF to move above the midpoint. Bulls lost control as the second candle became a Doji formation.

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Prices then began to retrace below the central pivot point to spend the next six hours between the central pivot and the first support zone. Traders watching this formation could have sold USD/CHF immediately after the doji formation to take at least 80 pips worth of profit between the pivot point and the first support level.

This chart shows a pivot point used in conjunction with a candlestick pattern to predict a trend reversal. Note how the descent stopped with the second support plane. Image by Sabrina Jiang © 2021

Another strategy used by traders is to look for prices to follow pivot levels, thus confirming the level as a strong support or resistance zone. In this type of strategy, you look for price to break the pivot level, reverse, and then move back towards the pivot level. When the price moves through the pivot point, it indicates that the pivot level is not very strong and is therefore less useful as a trading signal. However, when prices hesitate or “validate” around this level, the pivot level is more important and indicates that the move lower is an actual break, indicating that the move may continue.

Manchester City Trading Sessions: Timing Your Forex Mining Strategies

The 15-minute GBP/CHF chart shown below is an example of prices that “belong” to a pivot line. For the most part, prices were first limited to mid-range and pivot levels. At the European open (2 A.M.EDT), GBP/CHF rose and broke above the pivot level. Prices then bounced back to the pivot level, held it, and continued to rally again. The level was tested again shortly before the US market opened (7 A.M.EDT), when traders should have placed a GBP/CHF buy order as the pivot level had already proved to be an important support level. For those traders who used this strategy, GBP/CHF bounced back from the level and rose again.

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This is an example of a currency pair that “belongs” to the support and resistance identified in the pivot point calculation. These levels become more important the more times the pair tries to break through. Image by Sabrina Jiang © 2021

Traders and market makers have used pivot points to determine critical support and/or resistance levels for years. As the charts above have shown, pivot points can be particularly popular in the forex market as many currency pairs tend to fluctuate between these levels. Range traders enter a buy order near a specified support level and a sell order when the asset approaches the upper resistance. Pivot points also allow trend and breakout traders to spot key levels that must be broken for a move to qualify as a breakout. In addition, these technical indicators can be very useful when the market opens.

Individual investors are in a great position to better adapt to market movements and make more informed trading decisions if they are aware of where these potential turning points are located. Given their ease of calculation, pivot points can also be incorporated into many trading strategies. The flexibility and relative simplicity of pivot points certainly make them a useful addition to your trading toolbox.

The offers in this table are from partnerships that receive compensation. This allowance may affect how and where listings appear. does not cover all offers available on the market.The Nicolellis series of bars were developed in the mid-1990s by Vicente Nicolellis, a Brazilian trader and broker who spent over a decade running a trading desk in Sao Paulo. Local markets were very volatile at the time, and Nicolellis began to develop a way to use the volatility to his advantage. He believed that price movement was paramount to understanding (and profiting from) volatility. So Nicolellis developed the idea of ​​range bars that only consider price, leaving time out of the equation.

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Nicolellis found that bars, based only on price and not on time or other data, offered a new way to view and exploit volatility in financial markets. Most traders and investors are familiar with time-based bar charts. For example, a 30-minute chart shows price activity every 30 minutes

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