Profiting with pivot-based

concepts

with Frank Ochoa

A ROAD MAP TO THE MARKET

Sell
Sell

Sell
Sell

Sell
Sell
Agenda
An Introduction to Pivot-Based Indicators
• Why are Pivots Useful?

• Types of Pivots

An Introduction to Pivot-Based Analysis

• Pivot Trend Analysis

• Pivot Width Analysis

• Pivot Relationships

Emulate the Pros

Trade with Confidence

INTRODUCTION TO PIVOT-
BASED INDICATORS
why are pivots useful?

• Price-based, market-generated
information

• Help identify value, overbought,

and oversold conditions

• Leading indicators; zero lag

• Lead to self-fulling prophecy

• Allow for an array of analytical

methods
 Who Can Use pivots?
• EVERYONE!

• Novice traders, experienced

traders, and traders without
prior knowledge of pivots

• Pivots are price-based, so they

on all timeframes - perfect for
day, swing, and position traders

• Pivots work on any chart with

valid price action - perfect for
stocks, futures, ETFs, and
more!
a roadmap to the market

What are Pivots?

Pivots reveal hidden areas of
support and resistance for an
upcoming period of time. They
are often calculated by using
prior price data in a specific
formula or equation.
Calculating floor pivots

R2 = PP + (H – L) R2

R1 = 2 x PP – L R1

PP = (H + L + C) / 3 PP

S1 = 2 x PP – H S1

S2 = PP – (H – L) S2
applying the formula
Prior price
information…

High Close

…creates the pivots for the

Low upcoming period of time.
Types of pivots
Market Profile Floor Camarilla
Levels Pivots Pivots

R2 H5

R1 H4

VAH TC H3
POC PP
VAL BC L3

S1 L4

S2 L5
an array of
analytical methods

• Price Forecasting

• Trend Analysis

• Pivot Relationships

• Multiple Timeframe Analysis

• Powerful Confluence
INTRODUCTION TO PIVOT-BASED
ANALYSIS
Intro: Pivot-Based Analysis

• Pivot Trend Analysis

• Pivot Width Analysis

• Pivot Relationships
Pivot Trend Analysis
Pivot Trend Analysis forces you to become disciplined to
the trend by only buying in an uptrend, and selling in a
downtrend.
• Buy at support in a bull trend

• Sell at resistance in a bear

trend

• Keeps you disciplined to the

trend

• Keeps focus on higher

probability opportunities
Pivot Trend Analysis

Buy at SUPPORT
in a bull trend
Pivot Trend Analysis

Buy at SUPPORT
in a bull trend
Pivot Trend Analysis

Sell at
RESISTANCE in a
down trend
Pivot Trend Analysis

Sell at
RESISTANCE in a
down trend
“Can’t See the Forest...”

“It’s going
down. I need
to SELL.”
“...for the Trees”

Was actually a
pullback within
a bullish trend
Sell at Resistance...until

Sell Here

Close above
value “breaks”
downtrend
Pivot Width Analysis
Pivot Width Analysis allows you to forecast potential
price behavior using the width of the Value Area.
• Prior price behavior helps
forecast upcoming price behavior

• Unusually wide Value Area

forecasts sideways trading
Narrow

Wide
• Unusually narrow Value Area
forecasts breakout and/or
trending behavior

• Helps anticipate market behavior

• Choose which markets to trade

Pivot Width Forecasting

Narrow VA =
Trending/Breakout

Wide VA =
Sideways
Pivot Width Forecasting

Wide VA =
Sideways

Narrow VA =
Trending/Breakout
Pivot Width Forecasting
Pivot Width Forecasting
Pivot Relationships
Pivot Relationships allow you to gauge market
strength and anticipate potential price behavior.

• Helps you gauge market

strength/weakness

HV LV
• Helps you anticipate potential
price behavior
HV LV
• Allows you to focus on the best
trading opportunities
IV IV

• Keeps you disciplined

• Useful for planning your trades

Higher value relationship

• Most bullish relationship

• Occurs when the value area is

completely higher than the VA of
the prior session

• Look to buy at support (a pivot)

in a bull trend

• Buy into weakness, sell at a new

high within the trend
Higher Value Relationship

Gives bullish bias,

look to buy into
weakness at support

Higher Value
higher value relationship
Higher Value: NQ
Higher Value: NQ

O
Failed Higher Value: NQ
lower value relationship

• Most bearish relationship

• Occurs when the value area is

completely lower than the VA of
the prior session

• Look to sell at resistance (a

pivot) in a bear trend

• Sell into strength, cover at a new

low within the trend
lower value relationship
lower value relationship
Lower Value: YM
Lower Value Relationship

Gives bearish bias, look

to sell into strength at Lower Value
resistance
 inside value relationship
• Most explosive relationship

• Occurs when the value area is

completely inside the VA of the
prior session

• Initiative participants step in,

aggressively push price to new
value

• Gaps out of range/value tend to

work best

• Trend day usually develops

inside value relationship
inside value relationship
inside value relationship
inside value relationship
Inside Value: PG
Inside Value Relationship

Helps identify charts

poised for a breakout
opportunity

Inside Value
emulate the pros
 emulate the pros
Emulate how professional traders approach the market,
and eventually you will become a professional.
• Create a homework routine,
analyze the market before the
bell

• Plan the trade, trade the plan

• Set goals: profit objectives, loss

limits, revenue projections

• Create a trade journal

• Practice discipline
Identify the setup

Higher Value Setup

Identify the action zone in your

homework
(Plan the Trade)
EXECUTE YOUR PLAN

Bull ADR Target

Higher Value

Execute your plan, trade to

your target
(Trade the Plan)
IDENTIFY THE SETUP

Inside Value Setup

Identify the setup in

your homework
(Plan the Trade)
EXECUTE YOUR PLAN

Bull ADR Target

Open beyond range/value

confirms setup, trade to
target
(Trade the Plan)
trade with confidence
The BEST traders prepare for success.

• Do your homework

• Use pivots to develop a theory for

potential price direction/behavior

• Identify potential setups ahead of the

opening bell

• Let the market prove or disprove your

theory (you can make money either
way)

• Trade with confidence and execute

your plan
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