Pivots

Although I was an engineer for 1.5 decades, I honestly do not care for formulas or calculations. I'm really more a visual, artistic type. If formulas float your boat, have at it.

There are formulas to calculate the pivots. Great. I'm not going to punch these numbers into a spreadsheet or calculator. That does not work for me, though, I could do it.

However, what works for me is to look to the left to see what has been done.

Questions to ask?

1. Where did it rally? This would be a good entry LONG (calls).

2. Where did it bump its head at resistance? This would be a good entry SHORT (puts).

I want you to keep in mind, relative. Everything is relative.

What timeframe (s) are you using?

The shorter your timeframes, then you want to look for areas of rallies & resistances that are closer. If you have longer timeframes, those shorter rallies & resistances will not apply. So, you will have to set your stops accordingly.

Even if you're on a short timeframe, it's always advisable to take note of longer timeframes to see what the other pivots are, in case it blows through the pivots you have.

Take note of what is happening as it nears those pivots.

1. Is volume starting to dry up?
2. Is the price action volatility decreasing?
3. Are you seeing more doji's?
4. Do you see longer wicks (areas of testing)?
5. Where are you on RSI (is it in overbought or oversold territory?)?
6. Are you near a moving average (I use the 10, 20, 50, 200 EMA on all timeframes)?

These are questions you need to ask yourself. Of course, if you trade a barchart rather than a candlestick, you won't be asking about the doji's.

Pivots are areas where they see if they can bring more buyers in (if they are moving to the upside) or more sellers in (if they are moving to the downside). If they cannot, they will begin reversing the direction.
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