Intraday Pivot Analysis :- There are a number of pivot points to consider. The nature of the market action around these pivot points can be useful in giving clues on the immediate direction of the market. The pivot points to consider are the previous days high, low and close.
Openings :- The opening of a market in relation to the previous days action is the first clue on the direction of the market for that day, but it is by no means conclusive. It could be just satisfying all the bulls, say, in an up opening prior to a reverse movement. However, there are times when this indication can be extremely useful. The student must learn to integrate all the pertinent factors. With these reservations and no other factors at hand, indications are:
- An up opening in relation to previous close indicates an up market.
- A down opening in relation to previous close indicates a down market.
Gap openings :- Gaps on the opening seldom are present at the end of the day. The floor trader utilizes this information and will frequently sell a higher opening to drive it back down to the previous close where he will take scalping profile and might even reverse positions at this point. This is why a gap that exists at the end of a trading day has added significance.
Opening Plus 30 Minutes :- The markets will frequently establish a trading band in the first 30 minutes of market action. The direction out of this band will frequently establish the direction of the market for that day.
12:30 (EST) Rule :- The price at 12:30 or later in relation to the previous days close and opening frequently determines the direction market will take for the balance of the day and on into the next day. The proximity of support or resistance pivot points is also of considerable importance.
Close :- The close in relation to previous close and opening is important in pointing direction of next days action. The opening is more important than previous days close. Penetration of previous days high or low gives added significance. Also important is where the market closes in the range of the day. Above mid-range is positive. Below mid-range is negative.
Range :- If todays range is greater than the previous days range, it gives added significance to the direction of the move. These daily impulse patterns should be considered only as a rough index of trend direction. The whole pattern must be integrated prior to forming definite conclusions.
Pivot Point (PP) :- A top pivot point is the highest point reached in a swing prior to penetration of the low of the top day. A bottom pivot point is the lowest point reached in a swing prior to penetration of the high of the low day.
Swing :- The movement from one pivot point to the next.
Trend Direction :- Trend is up as long as new highs and higher lows are being made. It changes from up to down when the last low prior to the new high is broken.
