Pivot Points Crude Oil Trading Technical Analysis & Pivot Points Trading Signals
This technical indicator consists of a central pivot which is surrounded by 3 resistance levels below & 3 support levels above.
Initially these points were used by floor traders to analyze & trade the equities & futures oil markets. This technical technical indicator is considered to be leading rather than lagging.
Pivots provide a quick way for crude oil traders to analyze the general oil trend of how the crude oil market is going to be moving during the course of the day. A few simple calculations are used to plot the resistance and support levels.
To calculate these points for the coming trading day is the previous day's
- high,
- low, and
- close oil prices are used
The oil trading day closes & this daily closing time is when the indicator is updated.
The 24-hour cycle for this indicator are calculated using a complex formula. Central pivot is then used to calculate the support & resistance areas as follows:
Resistance 3
Resistance 2
Resistance 1
Pivot Point
Support 1
Support 2
Support 3
Crude Oil Trading Technical Analysis & Generating Trading Signals
This technical indicator can be used in different ways to generate crude oil signals. The following methods are the most common technical analysis:
Oil Trend Identification Signals
The central pivot is used by crude oil traders to determine the general market oil trend direction. Trades taken will only be in the direction of the crude oil trend.
- Buy trading signal - price is above the central point
- Sell trading signal - price is below the central point
Oil Trading Price Break out Signals
Oil Trading Price breakout signals are generated as follows
- Buy signal- is generated when the crude oil price breaks upwards through the central point.
- Sell signal- is generated when the crude oil price breaks-out downward through the central point.
Oil Price Break-out
Oil Trading Price Reversal Trading Signal
Oil Trading Price reversals are generated as follows
Buy Trading Signal- when crude oil price moves down towards one of the support level, then touches the support or moves slightly through it then quickly reverses and moves upwards.
Sell Trading Signal- when crude oil price moves up towards one of the resistance area, then touches the resistance or moves slightly through it then quickly reverses and moves downwards.
Oil Trading Price Reversal Trading Signal
Setting Stoploss & Limit Profit Values
The central pivot and the other support and resistance levels are used by crude oil traders to determine suitable stop loss and limit profit levels.
Setting Stoploss and Limit Profit
If a buy is placed above the central point the Resistance 1 or Resistance 2 can be used to set the take profit level, and the Support 1 can be set as a Stop-Loss Oil Trading Order Level for the trade.
To download Pivot points:
https://c.mql5.com/21/9/pro4x_pivot_lines.mq4
Once you download it open it with MQL4 Language Editor, Then Compile it by pressing the Compile Button & it'll be added to your MT4.
Note: Once you add it to your MT4, the indicator has additional lines named Mid Points, to remove these additional lines open MQL4 Language MetaEditor(shortcut keyboard key - press F4), & change line 16 from:
Extern bool midpivots = true:
To
Extern bool midpivots = false:
Then Press Compile button again, & it'll then appear as is exactly displayed on this site.
