Pivot Point Reversal
The pivot point focuses on the closing price relative to the bar with the highest High (or lowest Low).
After an up-trend:
- The close is below the Low of the day with the highest High.
After a down-trend:
- The close is above the High of the day with the lowest Low.
Complex Pivot Point
Complex pivot points sometimes occur, where it may take several days to form a pivot.
Remember:
The signals are most reliable if they occur after a strong trend. If the trend is weak, so is the signal.
Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.