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John L Person- Forex Conquered Trading Course- Notes

Pivot Point Analysis-

PP are a mathematical model & is used to project ranges & trade breakouts
Daily, Weekly & Monthly Time frames can be calculated. The calculation gives the high &
the low or both for a given trading session. The same principle goes for the weekly &
monthly calculations.
PP act as a leading price indicator for trades
Prices react differently at these levels
Daily PP-> use 5pm EST, NY, USA OHLC numbers
Weekly PP-> Sunday Open to Friday Close
Monthly PP- >1st Day of Month- last day of Month
Too many PP levels lead to information overload, leading to Analysis Paralysis
o Using R3 to S-3 with midpoints gives 13 price levels to monitor on each of Daily,
Weekly & Monthly PP, total of 39 numbers
o Better Option is: use Daily R2- S2
If price surpasses these levels, use weekly & monthly levels as they give
better indication for next target levels of S & R
If all of the above are breached, use LT Fibo price correction or extension
Johns Rule of Thumb for PP
Take R1 and S1 from all time frames, esp. in low vol consolidating trading sessions- total 6
no (levels)
Use PP to determine High & Low of the given time period esp in strong bull or strong beer
mkt conditions
In extremely Bullish mkt condition, PP (H+L+C)/3 can be target low for that trading
In extremely Bearish mkt condition, PP (H+L+C)/3 can be target high for that trading
Choose Correct Support/ Resistance Points
Option 1
o If C>O, S1 R2
o If C<O, R1 - S2
Option 2- better & reliable way is use the Close in relationship to PP,
o C>PP, S1 R2 (Bullish trend- HH, LH)
o C<PP, R1 S2 (Bearish trend- LH, LL)

Confluence of Various Time Frames

More confluence of diff time frame lining up with PP, stronger level of S & R

Pivot Point Moving Average

PP calculates the Average for sessions trading range= (H+L+C)/3.
= Average True Price for that time period.
Shows the continuance of the trend
3 period SMA of Pivot= (Pivot+Pivot+Pivot)/3
PP & 3 period PP average helps confirm triggers
Moving Averages with a higher slope indicates a bullish bias
Moving Averages sloping down indicates internal weakness and a potential price decline

Moving Averages:
Regression to means:- When prices deviate too far away from the mean or average, prices will regress or return
to averages of the market will pause or consolidate until the average catches up to prices

Opportunity for a speculator to take counter trend trade, while price returns back to
moving aveages
Further away the price is from the MA, more room for a reversal exists.
When markets prices is too far from the MA, use Weekly or Monthly target numbers for a
reversal point.