PIVOTS

Pivots come in 3 flavors: Daily, Weekly, Monthly. If you want to know their history and how they are calculated .. google it. All we are interested in here is how they can help us make money.

Pivots show points at which price is more likely to turn.

Each pivot (daily, weekly, monthly) also plots 3 lines above and below it. These are R1 R2 R3 (above) and S1 S2 S3 (below). R = resistance, S= support (but you knew that).

In the Resources section, I'll provide all these downloadable indicators for MT4 along with chart templates you can use so you will be up & running right away.

Now we are starting to see the power of CONFLUENCE. You want to find places where pivot lines pass close to the fractal arrows highs or lows. The closer the pivot lines are to the fractal lines you drew, the stronger will be the support or resistance of price at this area.

On the chart above, the bias is long (last fractal up arrow took out previous fractal up arrow and price is above gann though not visible on this chart) so we look for an area where price might retrace to a good entry point for the next leg up. The Weekly Pivot line passes right through a down fractal point which means price tested this previously and bounced off it, continuing higher. Therefore if price reaches this area again, it will have TWO good reasons to bounce off of it. Plus you can see that weekly pivot was tested by price several times previously. There are no guarantees price will retace back to that area, but if it does, it is likely to test it again, find support and continue back up.

Look at this:

But we are not ready to take a trade yet .. there is one more CONFLUENCE we want to add into the picture to make an even higher probability trade.

NEXT: FIBONACCI

(for more information on pivot pints, also check out the other free trading lessons on my site: here)

A recommended course for intermediate to advanced traders: