Identify Key Turning Points with Daily Pivot Points MT4 Indicator
The Daily Pivot Points MT4 indicator is an improved version of the traditional pivot points and it is used to determine the most important support and resistance levels in the market. Of course, you probably know, what’s so important about crucial support and resistance levels? If you know key pivot levels, you know when to enter and exit positions. Effective reversal strategies or breakout strategies depends heavily on proper identification of key support and resistance levels.
The Daily pivot points are mathematically derived price levels based on the previous day’s high, low and close. The main pivot point (PP) is the central pivot based on which all other pivot levels is calculated. In technical analysis, if the price is trading above the central pivot point this is considered as a bullish signal while if the price is trading below the central pivot point it is considered as a bearish signal.
Besides the central pivot which is represented by the solid yellow line the Daily Pivot Points MT4 indicator will also display six distinct layers of support and resistance levels. On top of that, we also have a dynamic pivot (the blue line) that changes with the price movement and which can be a great tool in identifying strong trends in the market.
The dynamic pivot is a robust moving average that evolves and interacts with the price action that can easily be used to trail your stop loss. In a trading market, it also can act as a measurement of buying and selling pressure, volatility defined by the distance between the blue line and price or whether or not the trend is in overbought or oversold condition.
Daily Pivot Points MT4 Indicator Settings
The preferred settings for the Daily Pivot Points MT4 indicator are the default settings. The indicator has three main components or variables. The first variable “ExtFormula” has two options:
- 0 it will only display one dynamic pivot
- 1 it will display two dynamic pivots forming a channel that for the most part will contain the price.
The second variable “ExtHowManyDays” represents the number of days taken into consideration when calculating the pivot points; it has assigned by default 30 which encompasses a month’s worth of trading data. The third variable “ExtDraw” will display the dynamic pivot (blue line) if selected true.
Daily Pivot Points MT4 Indicator Strategy and Trading Rules
If you’re an experienced trader you can trade based only based on the Daily Pivot Points MT4 indicator. Because the indicator provides you with multiple levels of support and resistance as well as a way to determine the market direction and last but not least it provides you with dynamic levels where you can place your stop loss, trading based on the Daily Pivot Points strategy can make your life as a trader much easier. Without further ado, these are the buy and sell rules of the Daily Pivot Points strategy:
- Buy Signal: If we’re trading above the solid line (central PP) buy at the first retest of the central pivot using a protective stop loss 5 pips below the second pivot below the solid yellow line. Take profit at the last pivot level above the central PP. Trail your SL below the blue line.
- Sell Signal: If we’re trading below the solid line (central PP) sell at the first retest of the central pivot using a protective stop loss 5 pips above the second pivot above the solid yellow line. Take profit at the last pivot level below the central PP. Trail your SL above the blue line.
Bullish and Bearish Trade Example
Above, we have the EUR/USD 4h chart and both a long and a short trading opportunity are highlighted. The Daily Pivot Points MT4 strategy not only that it provides with a great entry point near the central pivot point, but it also gives you a positive risk to reward ratio which means that your winners will outperform the losing trades.
Recommended Time Frames for Daily Pivot Points MT4 Indicator
Technically speaking, you can use this MT4 indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.
Daily Pivot Points MT4 Indicator Download
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