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concepts
Sell
Sell
Sell
Sell
Sell
Sell
Agenda
An Introduction to Pivot-Based Indicators
• Why are Pivots Useful?
• Types of Pivots
• Pivot Relationships
• Price-based, market-generated
information
R2 = PP + (H – L) R2
R1 = 2 x PP – L R1
PP = (H + L + C) / 3 PP
S1 = 2 x PP – H S1
S2 = PP – (H – L) S2
applying the formula
Prior price
information…
High Close
R2 H5
R1 H4
VAH TC H3
POC PP
VAL BC L3
S1 L4
S2 L5
an array of
analytical methods
• Price Forecasting
• Trend Analysis
• Pivot Relationships
• Powerful Confluence
INTRODUCTION TO PIVOT-BASED
ANALYSIS
Intro: Pivot-Based Analysis
• Pivot Relationships
Pivot Trend Analysis
Pivot Trend Analysis forces you to become disciplined to
the trend by only buying in an uptrend, and selling in a
downtrend.
• Buy at support in a bull trend
Buy at SUPPORT
in a bull trend
Pivot Trend Analysis
Buy at SUPPORT
in a bull trend
Pivot Trend Analysis
Sell at
RESISTANCE in a
down trend
Pivot Trend Analysis
Sell at
RESISTANCE in a
down trend
“Can’t See the Forest...”
“It’s going
down. I need
to SELL.”
“...for the Trees”
Was actually a
pullback within
a bullish trend
Sell at Resistance...until
Sell Here
Close above
value “breaks”
downtrend
Pivot Width Analysis
Pivot Width Analysis allows you to forecast potential
price behavior using the width of the Value Area.
• Prior price behavior helps
forecast upcoming price behavior
Wide
• Unusually narrow Value Area
forecasts breakout and/or
trending behavior
Narrow VA =
Trending/Breakout
Wide VA =
Sideways
Pivot Width Forecasting
Wide VA =
Sideways
Narrow VA =
Trending/Breakout
Pivot Width Forecasting
Pivot Width Forecasting
Pivot Relationships
Pivot Relationships allow you to gauge market
strength and anticipate potential price behavior.
HV LV
• Helps you anticipate potential
price behavior
HV LV
• Allows you to focus on the best
trading opportunities
IV IV
Higher Value
higher value relationship
Higher Value: NQ
Higher Value: NQ
O
Failed Higher Value: NQ
lower value relationship
Inside Value
emulate the pros
emulate the pros
Emulate how professional traders approach the market,
and eventually you will become a professional.
• Create a homework routine,
analyze the market before the
bell
• Practice discipline
Identify the setup
Higher Value
• Do your homework
4 Powerful Setups
The PEMA Pull-Back
The PEMA Breakout
The PEMA Crossover
The Modified PEAM Crossover