Simple and effective strategy: breakdown of Pivot levels

This strategy is based on a channel indicator that builds the levels of Pivot – W1 Pivot. The indicator draws on the chart weekly levels of resistance and support, on the breakdown of which we will earn.

First, I’ll clarify what Pivot points are. A candle has a body and shadows. Shadows are the maximum and minimum values ​​of the price for the time interval, the boundary values ​​of the body are the opening and closing prices. Pivot levels are reversal levels that are calculated using the following formula:

  • R1 (resistance line) = (Price * 2) – min.
  • R2 = Price + max – min.
  • R3 = max + 2 * (Price – min).
  • S1 (support line) = (Price * 2) – max.
  • R2 = Price – max + min.
  • R3 = min – 2 * (max – Price)

Price is the reference level, which can be calculated as follows: (max + min + close) / 3, where max is the maximum price for a fixed period, min is the minimum, close is the candle closing price. This calculation technique belongs to the main ones. There are other author’s options – the levels of Pivot Woody, Camarilla, DeMarca, etc. Which calculation option gives more accurate results, I suggest you test it yourself and share your opinion in the comments.

You can download the W1 Pivot indicator. The strategy is suitable for any currency pairs, timeframe – H1. Settings W1 Pivot: fort size = 10, label shifts = 0. Settings are symbolic because the formulas are the same and cannot be changed.

Terms of opening transactions on both sides:

  • We place a pending Buy Stop order at R3 + 10-20 points. For less volatile pairs, put a stop at a shorter distance.
  • We place a pending Sell Stop order at S3 + 10-20 points according to the same principle.

It is important to choose the appropriate length of stop loss and pending orders, volatility should not knock them out. The approximate stop length is 30-50 points, the target profit level is the same.

Despite the fact that there are few losing trades, signals rarely occur. Therefore, it is better to run it on several currency pairs at once or use it as an additional one.

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