click image for larger view
Two trades were taken overnight, the first is circled in the previous image where you can clearly see how price formed a near perfect twin tower pattern right on the S1 pivot point. This trade was then stopped out an hour later for a loss of 24 pips. This is profit taking happening as many other like minded traders who were previously short are taking profits at the pivot point. There is no way to distinguish the difference between this profit taking and a reversal which was what I anticipated this price action to be. This is all just a part of trading and the reason why I use stops.
The second trade for me happened two hours later and was initiated after price confirmed that it was unable to significantly penetrate the S1 pivot point. Here is a chart to help explain what I was seeing at the time.
click image for larger view
Price formed a spinning top just below S1 and was then followed by some solid buying as price pushed cleanly up through the pivot and closed well above it. This was still not enough to get me into a trade though, it was the following price action that got me aboard the move. It was when price retraced to the pivot and then clearly rejected it with the 2 spinning top/pin bar style candles that I entered the move. It was these buyers entering the market that finally convinced me that the odds favoured a move to the upside.
click image for larger view
Half of the position was taken of at the daily open for 50 pips and the stop was moved to break even. The remainder of the position was taken off at the central pivot point for 101 pips, this was a good days trading and the predicative power of the pivot points was plain to see on the day I feel. Pivots are one of the few leading indicators out there and if you do day trade and you are not using them it might be wise to put them on you charts and observe how price reacts to them, you may be pleasantly surprised.
Trade Well
Perry
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