hi traders in today's video we're going
to learn how to trade with pivot points
the right way and discuss a simple and
powerful central pivot range cpr
strategy with real-life examples from
the chart
make sure to watch this video till the
end if you want to take full advantage
of the power behind the pivot points
[Music]
trading with pivot points is the
ultimate support and resistance strategy
apart from the different key information
pivot points provide trading forex
stocks or crypto with pivot points will
take away the subjectivity involved with
manually plotting support and resistance
levels
as usual we will go through the basics
then discuss how to trade using cpr with
multiple examples from the chart
with that being said let's get into it
pivot points are one of the most
elementary yet powerful indicators used
in technical analysis it is comprised of
a pivot line surrounded by a series of
support and resistance levels which
helps in speculating the price movements
there are several different flavors of
pivot points used by price action
traders but the one that is drawing mass
attention is central pivot range or cpr
indicator
central pivot range is a versatile
technical indicator usually comprising
three levels a central pivot point
top central level tc
and bottom central level bc
to sum up the fundamental idea behind
this indicator is that the particular
day's trading range captures everything
about the market sentiment and hence
this range can be used to predict the
price movement of the following days
but you might be wondering how does cpr
differ from traditional pivot points
if you're familiar with pivot point you
would know that it generally has one
central pivot line surrounded by support
and resistance levels
it's used to determine the overall trend
of the market over different time frames
it is simply the average of the intraday
high and low and the closing price from
the previous trading day
on a subsequent day trading above the
pivot point is thought to indicate
ongoing bullish sentiment while trading
below the pivot point indicates bearish
momentum
the cpr is a leading indicator that
helps traders identify key price levels
and predict the trend momentum and
direction based on past price action
by using the cpr indicator traders get
to decide the market before the opening
whether it's going to be trending or
consolidating
on top of that the cpr is a great
indicator to identify key price points
to set up trades especially for intraday
trading
let's look at a few examples from the
chart
before we discuss the strategy if you're
on trading view you can add the cpr
indicator to your chart from the
indicators tab unfortunately tradingview
doesn't offer a built-in cpr indicator
which is the reason why we're going to
use a third party one
there are different options to choose
from and they're pretty much the same
i recommend using cm pivot points by
chris moody
you can adjust the settings to make it
aligned with our strategy
i usually add the daily one to my chart
but i will tell you in a bit why you
should also use the weekly and monthly
in order to come up with a high
probability setup
now we need to add the cpr levels to our
chart
again hit on indicators and look for cd
pivot range by christian d
once done we will get the cpr central
pivot point the top and the bottom
central levels together with the two
resistance and support zones
we can notice that the cpr range can be
narrow or wide depending on the distance
between the top and the bottom lines
always remember that cpr values act as
the reference for tomorrow's trading
this is a leading indicator so the cpr
range we have added to our chart
represents the key levels recorded the
previous day
if the cpr is narrow and the three lines
are very close to each other this means
that we are looking at a trending market
and the lines can easily be broken as
the price won't tend to respect the key
level
the price will mostly move in one
direction and you can enter the market
when a reversal is formed
this is an example where the cpr is
pretty narrow the market was trending
throughout the entire day and the price
broke the cpr levels multiple times
on the other hand when the cpr is wide
and the distance between tc and bc lines
is relatively higher it indicates a
sideways market
the price in this situation will have
more respect for the key levels
therefore you can rely on the cpr range
as important support or resistance zones
and use a sideways trading strategy
we found the cpr indicator to be highly
accurate in the intraday time frame
it's recommended to use it in a 5 or 15
minutes chart for forex high beta stocks
or indices
before we reveal the strategy i just
want to highlight the concept of virgin
cpr
if the price levels for a particular
time frame do not touch the cpr levels
of the same time frame then that range
is known as virgin cpr
based on statistics there's up to a 40
percent chance that the price would not
touch the virgin cpr for a given day
which is why it could be used as a very
strong support and resistance level
this could be extremely useful if you're
trading a pair that has a strong
correlation with another one for
instance if you're trading the u.s swiss
and the price of gold is approaching a
virgin cpr level
you should expect either a consolidation
or a price breakout on the swissy chart
this will save you from entering an
uncertain market or being stuck in
consolidation for a few days especially
if you're going short on the swissy as
it has a massive negative rollover rate
if you look at the big picture you'll
notice that whenever we have a sideways
movement the next day cpr is narrow
this is exactly what we observe on the
following day
now the second day itself was a trending
day
hence the cpr for the third day was a
wide-ranged one
like everything else in technical
analysis cpr also is not a 100 win but
has a higher probability of success when
traded properly you can succeed with
proper position sizing and risk
management
with that out of the way let me share
with you the cpr trading strategy with
some examples
when the cpr range is narrow that means
we're looking at a trending market
look for buying opportunities when the
current market price is higher than top
central pivot tc
let me elaborate assume a forex pair has
rallied for a bit the current market
price is higher than the tc and you're
looking for an opportunity to set up a
buy trade
you can now wait till the price arrests
its rally and retraces back above the tc
line avoid using pending orders as it's
important to look at the price action
during the retracement
you want to see candles with short tails
as you don't want to enter the market
during an uncertainty phase
your stop loss should be below the cpr
range as the price will struggle to
break through the key level
you can also add in a 200 simple moving
average to the setup in order to
strengthen your position
you can target the second resistance but
consider closing a part of your position
when the price hits the first one
especially if you see some pin bars as
that shows a possibility for a trend
reversal to occur
regarding the short trades the rules are
pretty much the same
we should look for a forex pair with a
narrow cpr
the price is below the bottom central
level
we go short after a bearish spike is
formed
we can wait for a reversal to make sure
that we sell at the highest price
possible
the cpr range will act as a resistance
level that could be used to protect our
stop loss by placing it a few pips above
it
we can target any of the support levels
but make sure to look at the
fundamentals to estimate the volatility
of the market before placing the trade
you can enable the weekly and monthly
pivot levels from the indicator settings
remember that when you see the daily
support or resistance close to the
weekly or monthly one the zone would
mostly be respected by the price so make
sure to use it as a protection for your
stop loss and avoid having it in between
your entry and take profit
before i leave you with more practice
examples from the chart
don't forget to subscribe to the channel
and check out the other videos
do you want me to back test this
strategy 100 times or build a trading
indicator based on its rules
let me know in the comments section and
don't forget the thumbs up as usual
you