This is part of the Education Series prepared by StockStream Financial Services. This session looks at developing trading strategies using Pivot Points.

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Pivot Points
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Disclaimer
• Trading carries significant risk of losses and may not be suitable for all
investors. Traders should assess these risks either themselves or in
consultation with a financial advisor before investing.
• There is no guarantee that the trading techniques, methods and other
information in this presentation will result in profits. The content in this
presentation in only intended for educational and informational
purposes and not intended as trading recommendation.
• The content of this presentation is subject to change without notice.
• Stockstream Financial Advisory Services LLP or mystockstream.com
will not take any liability or accountability of losses arising from the use
of information in this presentation in any manner.

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Introduction
• Pivot points provide support and resistance levels for a particular
trading period. For example, if you are using daily charts you will get
daily pivots, hourly charts will give hourly pivots, etc
• Pivot Points were conceived when there were no electronic systems
and were used by pit traders.
• Pivot Points are leading indicators of price action.
• Pivot points are calculated using price data for the previous trading
period.

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Description
• Central pivot (PP) is the determinant
of the trend for the particular period.
• If price opens above the central pivot
look for opportunities to buy and vice
versa.
• R1, R2 and R3 are points of
resistance if the price moves higher.
• S1, S2 and S3 are points of support
if the price moves lower.
• M0-M5 are mid points between the
support and resistance levels. They
act as intermediate support or
resistance depending on their
location below or above PP

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Strategy 1: Continuation
• Trading strategy (Long):
• Determine the broader trend. If it
is higher look for buy opportunity
and vice versa.
• If price for the trading period
opens above PP look to buy tests
of PP or M2.
• Stops: Placed below the low from
the test of PP or M2.
• Targets:
• If we get a bounce after a test
of PP target R2
• If we get a bounce after test of
M2 target M4

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Strategy 2: Reversal
• Trading strategy (Long):
• Determine the broader trend. If it
is higher look for buy opportunity
and vice versa.
• If price for the trading period
opens below PP look to buy
tests of M1 or S2.
• Stops: Placed below the low
from the test of M1 or S2.
• Targets:
• If we get a bounce after a
test of M1 target M3
• If we get a bounce after test
of S2 target PP

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Example
• Strategy 1:
• Broader market trend is up. Look
for buying opportunities.
• For both (B) and (C) price opens
above PP.
• Then price falls down to test M2
for (B) and PP for (C).
• After the test price bounces higher
to reach targets of M4 for (B) and
R2 for (C).
• Strategy 2:
• Broader market trend is up. Look
for buying opportunities.
• For (A) price opens below PP.
• Then price falls down to test M2.
• After the test price bounces higher
to reach targets above PP.

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