Support and resistance are key concepts that traders should learn when they are doing technical analysis. This is because major supports and resistances are areas where price action could possibly make an interesting move. Price could either bounce off, break through, or stutter with indecisiveness as price reaches these major levels.
Traders who know how to identify these key support and resistance levels could make a lot of money trading based on either reversals or breakouts occurring on these levels. Traders who have no idea where the key support and resistance levels are run the risk of trading against such levels which could result in a losing trade.
Support and resistance levels are very important. However, identifying these major support and resistance levels is very difficult for new traders. The various types of support and resistance levels alone can cause so much confusion. Traders could be looking at horizontal support and resistance levels based on swing points or diagonal supports and resistances that form channels. Then, there are the dynamic support and resistance levels based on technical indicators. So, how do we objectively identify key support and resistance levels without the added guess work?
Weekly Pivot Cross Signal Forex Trading Strategy, we would be looking at how we could use Pivot Points as an objective basis for support and resistance levels.
Weekly Pivot Points or Pivot Weekly
Table of Contents
- 1 Weekly Pivot Points or Pivot Weekly
- 2 EMA Crossover Signal
- 3 Trading Strategy
- 4 Conclusion
Pivot Point is a key technical indicator which many professional and institutional traders are fond of using. Pivot Points are price levels that traders use to identify key support and resistance levels.
Pivot Point indicators typically plot five lines, which act as support and resistance levels. Some variations plot seven. The main line is called the Pivot Point (PP), the two support levels are called Support 1 (S1) and Support 2 (S2), while the two resistance levels are called Resistance (R1) and Resistance 2 (R2).
The main Pivot Point (PP) line is basically the average of the high low and close of the previous period. The other support and resistance levels are derived mainly from the PP.
Pivot Points are unique because these levels are objectively plotted by an indicator, yet at the same time it is static. Chances are traders are looking at the same level because the high, low and close of the previous period should not differ too much. This creates support and resistance levels which many traders would agree on.
The Weekly Pivot Point is an interesting pivot point level. It is simply a pivot point which is based on the high, low and close of the previous week. This is especially useful in forex trading. This is because various brokers, depending on their open and close time, may have varied high, low and close levels using the Daily Pivot Point because the forex market is open 24 hours a day with brokers stationed in various time zones. The Weekly Pivot Point however do not have this problem. This allows traders to use the same support and resistance levels as the other big players are using, making it more reliable.
The Weekly Pivot Point indicator is especially useful when traded in a day trading or swing trading strategy.
This version of the Weekly Pivot Point plots blue lines to represent the resistance levels, red lines to represent the support levels, and a goldenrod line to represent the pivot point.
EMA Crossover Signal
EMA Crossover Signal is a trend reversal signal indicator which is based on moving average crossovers.
One of the most popular trend reversal techniques that traders use is trading as two moving average lines crossover. This often signifies the reversal of a trend. The technique is to wait for a shorter-period moving average line to cross over a longer-period moving average line and trade in the direction where the faster moving average line is moving to.
The EMA Crossover Signal indicator is based on the same moving average crossover concept. It is based on the Exponential Moving Average (EMA) line, which is a very effective moving average line. The EMA is characteristically smooth and responsive. This allows for a line that does not produce too much false signals yet at the same time is not too lagging.
This indicator simply plots an arrow pointing the direction of the new trend as it detects a crossover of its underlying moving average lines. Traders can simply use these arrows as a trend reversal entry signal.
This trading strategy is a day trading strategy which trades on the reversals coming form the support and resistance levels of the Weekly Pivot Points.
Trades are taken as the price action starts to show signs of reversal after rejecting a support or resistance level based on the Weekly Pivot Points. Trade entries are confirmed based on the signal provided by the EMA Crossover Signal indicator.
- EMA Crossover Signal
- Faster EMA: 7
- Slower EMA: 21
Preferred Time Frames: 5-minute chart only
Currency Pairs: FX majors, minors and crosses
Trading Sessions: Tokyo, London and New York sessions
Buy Trade Setup
- Price action should reject a pivot point level, support level or resistance level that turned support from below.
- Enter a buy order as soon as the EMA Crossover Signal indicator plots an arrow pointing up.
- Set the stop loss on a support below the entry candle.
- Close the trade as soon as the EMA Crossover Signal indicator plots an arrow pointing down.
Sell Trade Setup
- Price action should reject a pivot point level, resistance level or support level that turned resistance from above.
- Enter a sell order as soon as the EMA Crossover Signal indicator plots an arrow pointing down.
- Set the stop loss on a resistance above the entry candle.
- Close the trade as soon as the EMA Crossover Signal indicator plots an arrow pointing up.
This trading strategy is a simplistic method of trading support and resistances based on Pivot Points.
It is no secret that price does tend to respect Pivot Point levels as support and resistance levels. However, the question is which among these levels will price bounce off from. Some traders prefer to guess or anticipate. This method however waits for a signal after a bounce from any of these levels. If the bounce is strong, traders may find themselves trading in the direction of the trend based on the lower timeframe. This is where traders can make money out of this type of strategy.
Forex Trading Strategies Installation Instructions
Weekly Pivot Cross Signal Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
Weekly Pivot Cross Signal Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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How to install Weekly Pivot Cross Signal Forex Trading Strategy?
- Download Weekly Pivot Cross Signal Forex Trading Strategy.zip
- *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Weekly Pivot Cross Signal Forex Trading Strategy
- You will see Weekly Pivot Cross Signal Forex Trading Strategy is available on your Chart
*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
Click here below to download: