The Pivot Point Trading Strategy: How to use the TradingView Pivot Point Indicator
Pivot points are a powerful tool in technical analysis, that can help traders identify key support and resistance levels in the market. In this guide, we’ll dive into how to use the Pivot Points High Low indicator on TradingView to enhance your trading strategy. Whether you're trading forex, stocks, or crypto, understanding pivot points can give you an edge in spotting critical market movements.
What Are Pivot Points in Trading?
Pivot points are calculated on a chart indicating key market structure areas. These levels are derived from significant high and lows points. The Pivot Points High Low indicator goes a step further by visually highlighting pivot point high and low points on the chart automatically, making it easier to identify critical areas for trading.
How to Add Pivot Points High Low on TradingView
To start using this indicator, follow these steps:
Step 1: Access the Indicator
Open TradingView and click on the Indicators tab.
Search for Pivot Points High Low in the search bar.
Select the indicator created by TradingView titled Pivot Points High Low.
The Pivot Points High Low Indicator in TradingView
Configuring the Pivot Points High Low Indicator
Once added to your chart, the default settings might not be optimal. Let’s adjust them for better visibility and usability:
Go to the Settings tab for the indicator in the upper-left corner.
Change the Pivot High and Pivot Low settings to 20. This adjustment fine-tunes the length of pivot points on the chart, helping you focus on significant market levels.
Customize the colors for better clarity:
Set Pivot High points to black.
Set Pivot Low points to white.
After these changes, the pivot points will be more visually distinct, allowing you to analyze the chart more effectively (if you have a white background).
Pivot Point Settings for more significant support and resistance levels.
Using Pivot Points for Support and Resistance
Pivot points are invaluable for identifying support and resistance levels. Here’s a simple yet effective approach:
Cluster Analysis: Look for areas where multiple pivot points are close together. These clusters often indicate significant support or resistance zones.
For example, if the price repeatedly touches a cluster of pivot points without breaking through, that area likely serves as strong support or resistance.
Breakout Confirmation: When the price breaks through a cluster of pivot points, it often leads to a strong directional move.
For instance, a breakdown below a support zone marked by pivot points could signal a bearish trend, while a breakout above resistance may indicate a bullish run.
Practical Example of Pivot Points in Action
Spotting a Bearish Breakdown
In one scenario, the pivot points formed a strong support area. Over time, the price printed lower highs, creating a descending triangle pattern. As the price got squeezed tighter between the support zone and the downward-sloping resistance, it finally broke below the support. This resulted in a sharp move to the downside.
Pivot Points Trading Example
Identifying Key Resistance
On another occasion, multiple pivot highs aligned to form a critical resistance level. When the price finally broke through this resistance, it triggered a strong bullish rally.
These examples show how pivot points trading strategies can provide actionable insights for your trades.
Bonus Tip: Combine Pivot Points with Chart Patterns
To enhance your strategy, combine pivot points with chart patterns such as triangles, wedges, or channels. Pivot points often align with these patterns, providing additional confirmation for your trades.
Why Use Pivot Points High Low Indicator?
The Pivot Points High Low indicator is ideal for traders who want:
A simple yet effective tool for identifying key market levels.
An easy way to visualize support and resistance zones.
A method to spot potential breakouts and reversals.
Whether you’re a beginner or an experienced trader, incorporating pivot points into your analysis can potentially significantly improve your trading results.
Conclusion
Mastering pivot points can be useful for any trader looking to improve their technical analysis. By using the Pivot Points High Low indicator on TradingView, you can easily identify critical support and resistance levels, anticipate market moves, and potentially level up your trading strategies.
Recommended Resources
TradingView: Access to the Pivot Point Indicator.
InvestingPro: Powerful AI trading strategies and more (up to 2000% profit).
Bybit: Trading Crypto? Unlock up to $30,000 on Bybit!