Forex Strategies (MT5), Trading-Forex

Pivot Point Bounce Intraday Forex Trading Strategy – MT5

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Bullish Pivot Bounce Setup

If you would observe a forex chart, you would notice that price tends to move in waves. It would move in one general direction based on momentum. Then, it would seem to hit a wall and start to reverse. As traders, we sometimes cannot help but think, “If only I had traded at that bottom,” or “If only I made a short trade at that peak.” It is natural for us to think that way because those are the opportunities that could have given us so huge profits. If we could only learn to anticipate these reversals then we could somehow take advantage of these opportunities and make some profits.

There are a couple of ways to anticipate these reversals. The first method would be to observe for the start of the probable reversal then trade it as the market starts to reverse. There are several ways to do this. Some would use candlestick patterns, price action or price patterns. This method is an excellent way to anticipate reversals. However, this requires skill and practice. Not all traders can easily identify these patterns. Another technique would be to use technical indicators. This could either be based on oscillators, moving averages, or any type of trend following indicator. This method does tend to have more lag. But it also has the advantage of providing a more objective basis of a reversal trade.

Another method traders use is to identify key areas where price may reverse and anticipate the reversal. This could be based on support and resistance levels, supply and demand zones, or dynamic support and resistance areas based on technical indicators.

Let us look into how we could make use Pivot Points to anticipate the location of a probable reversal and confirm such reversals based on a confluence of trend indicator signals.

Pivot Points

Table of Contents

Pivot Points are key price levels used by traders to determine a support or resistance level. These price levels are based on a mathematical computation and is automatically plotted by a Pivot Point indicator.

Pivot Points usually have seven levels. The middle line or level is called the “Pivot Point”. the lines above it are called Resistance 1, 2 and 3 (R1, R2 and R3), while the lines below it are called Support 1, 2 and 3 (S1, S2 and S3).

The middle line or Pivot Point is an average of the high, low and close of a preset period, whether it is a Daily Pivot Point or a Weekly Pivot Point. The Support and Resistance levels have different computations which are also derived from the highs and lows of price from the same period.

Price tends to bounce off Pivot Point levels. It tends to reverse back down whenever it hits a major resistance level or bounce back up whenever it hits a major support level.

One advantage that Pivot Points have over support and resistance levels is that it is not subjective. Most big institutional traders look at the same Pivot Point level. As long as you have the same price feed, you should also have the same daily and weekly pivot points. As retail traders, we do not have the same feed as the big banks who use the Bloomberg terminal, but our price feeds would still be quite similar. This means if we have a decent Pivot Point indicator, we will have Pivot Point levels which are approximately close to what institutional traders are looking at.

As such, it is a decent basis for anticipating the area where price may reverse.

Pivot Points MT5 Indicator

Pivot Points MT5 Indicator

7 EMA – 21 SMA Crossover

As mentioned earlier, one of the ways to anticipate a trend reversal is based on the crossover of moving average lines. This method is simple and easy. A fast moving average line crossing above a slow moving average line indicates a bullish trend reversal. On the other hand, a crossover of the same lines downward indicates a bearish trend reversal.

The 7-bar Exponential Moving Average (EMA) and 21-bar Simple Moving Average (SMA) is a widely used short-term moving average line. This would fit our strategy well as this tends to respond fast enough to trend reversals.

7 EMA – 21 SMA Crossover

7 EMA – 21 SMA Crossover

Accelerator Oscillator

The Accelerator Oscillator (AC) is a momentum technical indicator develop by Bill Williams. This indicator is based on the Awesome Oscillator (AO).

The Accelerator Oscillator computes for the difference between the Awesome Oscillator and its 5-period moving average. The result is then plotted as bars on its own window. Positive bars indicate a bullish momentum, while negative bars indicate a bearish momentum.

Accelerator Oscillator

Accelerator Oscillator

The Accelerator Oscillator is a very responsive momentum indicator. This would be perfect for our strategy as it quickly tells us when price action is about to reverse.

Bullish Pivot Bounce Setup

  • Find a forex pair which has a wide range between its pivot points on the 15-minute chart.
  • Wait for price action to show signs of bouncing back up from a Pivot Point level.
  • The Accelerator Oscillator should change to positive.
  • Enter a buy order as soon as the 7 EMA line crosses above the 21 SMA line.
  • Set the stop loss on the support below the entry candle.
  • Exit Option 1: Close the trade as soon as the Accelerator Oscillator shifts to negative.
  • Exit Option 2: Set the take profit target at the next resistance level.

Bullish Pivot Bounce Setup

Bullish Pivot Bounce Setup

Bearish Pivot Bounce Setup

  • Find a forex pair which has a wide range between its pivot points on the 15-minute chart.
  • Wait for price action to show signs of bouncing back down from a Pivot Point level.
  • The Accelerator Oscillator should change to negative.
  • Enter a sell order as soon as the 7 EMA line crosses below the 21 SMA line.
  • Set the stop loss on the resistance above the entry candle.
  • Exit Option 1: Close the trade as soon as the Accelerator Oscillator shifts to positive.
  • Exit Option 2: Set the take profit target at the next support level.

Bearish Pivot Bounce Setup

Bearish Pivot Bounce Setup

Conclusion

Many profitable intraday traders use the daily pivot points as a basis for their trading strategy. This is typically traded on a 15-minute chart and below. They would usually trade reversals coming off these levels. Some would use price action while some would use candlestick patterns. This is necessary because we need to make quick decisions when trading the intraday charts. However, it is not that easy to trade based on price action alone as it requires a lot of practice and screen time to get a feel of what would work and what does not.

This strategy simply allows us to trade even with just a little experience using price action as we are also using indicators to confirm our setups. Sure, there would be more lag but these indicators tend to be responsive. As long as there is enough space between the support and resistance levels, we could still have a viable trade.


Forex Trading Strategies Installation Instructions

Pivot Point Bounce Intraday Forex Trading Strategy – MT5 is a combination of Metatrader 5 (MT5) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

Pivot Point Bounce Intraday Forex Trading Strategy – MT5 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 Pivot Point Bounce Intraday Forex Trading Strategy – MT5?

  • Download Pivot Point Bounce Intraday Forex Trading Strategy – MT5.zip
  • *Copy mq5 and ex5 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 Pivot Point Bounce Intraday Forex Trading Strategy – MT5
  • You will see Pivot Point Bounce Intraday Forex Trading Strategy – MT5 is available on your Chart

*Note: Not all forex strategies come with mq5/ex5 files. Some templates are already integrated with the MT5 Indicators from the MetaTrader Platform.

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