- How to use Pivot Points to Trade Breakouts
- Currency Strength Meter Download Page - Currency News Trading
Using pivot points for range trading will work, but not all the time. In those times that these levels fail to hold, you should have some tools ready in your forex toolbox to take advantage of the situation!
How to use Pivot Points to Trade Breakouts
Once ADX starts dropping below 55 again, it could mean that the uptrend or downtrend is starting to weaken and that it might be a good time to lock in profits.
Currency Strength Meter Download Page - Currency News Trading
In this example, once you saw price break R6, you would have set your stop just below R6. If you believed that price would continue to rise, you could keep your position and move your stop manually to see if move would continue. You 8767 d have to watch carefully and adjust accordingly. You 8767 ll learn more about this in later lessons.
As for setting targets, you would typically aim for the next pivot point support or resistance level as your take profit point. It 8767 s very rare that price will break past all the pivot point levels, unless a big economic event or surprise news comes out.
Lastly, just like in range trading, it would be best to pop on other key support and resistance levels. You might be thinking that R6 is breaking, but you failed to notice a strong resistance level just past R6. Price may break past R6, test the resistance and just fall back down.
Second, you won 8767 t be sure if it 8767 s a true breakout, or just wild moves caused by the release of important news. Spikes in volatility are a common occurrence during news events, so be sure to keep up with breaking news and be aware of what 8767 s on the forex calendar for the day or week.
If you had taken the aggressive method, you would have caught the initial move and been celebrating like you just won the World Cup.
Here we see EUR/USD made a strong rally throughout the day. We see that EUR/USD opened by gapping up above the pivot point. Price made a strong move up, before pausing slightly at R6.
The Average Directional Index, or ADX for short, is another example of an oscillator. It fluctuates from 5 to 655, with readings below 75 indicating a weak trend and readings above 55 signaling a strong trend.