Powerful strategy

Using price charts to trade swing, using breakouts and pivot points can be a powerful trading strategy for active stock traders, exchange-traded funds and forex. Looking for strong market moves, highlighting certain trading patterns (like «cups with handle» and reversals on a large volume) makes it the easiest to use 15- minute candlestick chart (as shown in the diagram 1).

Trading strategy on the breakout of the 15-day high

One of the strongest entry patterns is simple enough — buy on breakout of new highs every time, when price breaks new 15-day highs (cm. diagram 2). To avoid false breakouts, you can give a certain tolerance for movement — for example, for the stock market add 35 pips above 15-day high. So, in the diagram below we see, that a long entry is foreseen on a breakout of a new high, subject to a certain tolerance (57.5 + 0.35 = 57.85).

Buying on a breakout of new model highs «cup with handle» (especially, when accompanied by an increase in volume), can also be a fairly effective trading strategy.

Entering swing trades on a breakout of the pattern «cup with handle» after a gap on a 15-minute chart is also often successful. As shown in the diagram 3, the gap happened 10 May, and was accompanied by a breakthrough model «cup with handle» выше уровня 94.00. Adding new trading positions to such a swing can also be effective on continuation breakout moves..

When entering on a breakout of a new high, it is often also good to check, is the main index found (for example, NASDAQ для рынка акций) in the process of overcoming new 2- daily high. Otherwise, it is better to refrain from new entries to the long side..

For example, on the diagram 4, because of, that the NASDAQ composite index did not break a new 2-day high, long positions should be introduced more conservatively — because the trend of the previous day was steadily downtrend, and the index is not in the process of breaking through a new 2-day high.

Swing trade using 15-day pivot points

In a consolidating market, it is often more justified to look for an entry at pivotal centers., as well as continuation breakouts, profiting from potentially oversold assets, who attract new buyers, once prior areas of support have been confirmed.

For example, on the diagram 5 we see, that the price was developing a downtrend on the left side of the 15-minute chart. Затем была consolidation in a period 10-16 June, and buyers became more active in the period from 17 on 20 June. The signal for a new long entry would be received at 35 pips above resistance lines — at the level 24.35.

Pivot centers above resistance levels with round values ​​are easiest to spot at 15- минутном свечном графике, using price ranges, Models «cup with handle» and recovery of the uptrend, observed on the diagram.

15-day pivot point strategy for the forex market

You can search for entries on pivot centers for transactions in the foreign exchange market., используя 60-минутный свечной schedule, as shown in the diagram 6. The key point here can be the search for the previous highs of the model. «cup with handle», with an entrance of approximately 40 pips above the previous high, for the input signal at the reference center. In the EUR / CAD chart below, the previous high was formed at 1.39, so the input signal is received at 40 points above this level.

Use of the Medium Directional Index (ADX) can also be helpful for improving login. It may be better to wait a few days, until the ADX line exceeds the level 30 for new entrances. The ADX indicator works well at capturing volatility.

The indicator value decreases, when variability (and trading opportunities) is low, and increases, when volatility increases. If you wait a day after that, how the ADX value will exceed the level 30, then you can reduce the number of false breakouts due to choppy movements.

It can also be useful to use a weighted moving average with a period in the foreign exchange market. 55, waiting for price breakouts above this signal line. If the price is still consolidating around the signal line, as shown in the diagram 6, it's better to wait, while she moves, at least, on 40 pips above the red line of the weighted Moving Average before opening a new position.

Now, let's take a look at the pivotal centers of recovery «cups with handle» (cm. diagram 7). In this diagram, initial bearish pattern with support at 1.62 was confirmed by price action, so that the entrance to the long side could be done, if the movement continues, at least, on 40 pips above this resistance line.

As in the previous example, to enter the market, it is better to wait for the entry a day after the ADX line exceeds the level 30, which would indicate higher momentum and volatility.

Conclusion

Applying well-thought-out entry signals with practice and experience can become quite easy.. Понимание, how to identify potential entry patterns with high probability, then to be able to confidently trade on them, is that skill set, which can be learned over time.

Wherein, using easy-to-read price charts with clearly identifiable signals can be of great help for active traders.

It takes years, to explore, what breakouts and pivot points will work, as opposed to false breakouts or choppy moves. At all, when trading breakouts and pivot centers, it is better to focus on high volatility, highly liquid markets, which have broad, net trading ranges, вроде тех, what were discussed by us above.

Using price charts, to identify strong breakouts and pivot center signals could potentially be a key aspect of your personal trading success.

A source: FOREX MAGAZINE

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