CPR Pivot Points: The Biggest Secret They Keep From You

Finding the correct trend in price action is crucial for becoming a profitable trader. Many traders struggle with identifying trends and often enter positions at the wrong time, resulting in stop-losses being hit. However, there’s a strategy that can solve these issues: using pivot points and the CPR (Central Pivot Range) method. Let’s explore this strategy in detail.

Understanding Pivot Points

Pivot points are the average of the intraday high, low, and closing prices from the previous trading day. They are used to identify key support and resistance levels in price action.

Setting Up the CPR Indicator

Step 1: Adding the Indicator

1. Open the indicator search tab in TradingView.
2. Search for “SD CPR” by Satoshi and add it to your chart.

Step 2: Adjusting the Settings

1. Look-back Range: Change the look-back range to 100 in the input tab.
2. Style: Change the shapes to crosses and adjust the opacity and color to make the indicator easier to read.

Understanding the CPR Indicator

The CPR indicator consists of three components:

• Top Central Pivot Range (CPR) Line: The upper line.
• Pivot Line: The middle line, which is the average of the high, low, and close.
• Bottom Central Pivot Range (CPR) Line: The lower line.

Reading the CPR Indicator

1. Support and Resistance: Pivot points serve as support and resistance levels. The advantage is that pivot points do not change based on the timeframe, making them universally consistent.
2. Trend Identification:
   • If the price is trading above the CPR, it’s an uptrend.
   • If the price is trading below the CPR, it’s a downtrend.
   • If the CPR is higher than the previous day, it’s an uptrend.
   • If the CPR is lower than the previous day, it’s a downtrend.

CPR Width

• Wide CPR: Indicates strong support or resistance and often leads to ranging markets.
• Narrow CPR: Indicates less reliable support or resistance but may signal the start of a trending phase.

Using CPR to Enter Positions

Identifying the Trend

1. Position of the CPR:
   • Higher than the previous day: Look for buy positions.
   • Lower than the previous day: Look for sell positions.
2. CPR Width:
   • Wide: Price may range or find strong support/resistance.
   • Narrow: Market may trend, and the CPR may offer less support/resistance.

Entry Examples

Long Position Example

1. Trend Identification: Price breaks the bearish trend line and makes a higher high.
2. CPR Analysis: New CPR with narrow lines suggests a trending phase.
3. Entry: After price rejects the CPR, enter a long position.
4. Stop-Loss: Place at the bottom CPR line or swing low.
5. Take Profit: Target the previous swing high with a risk-to-reward ratio of at least 1.5.

Short Position Example

1. Trend Identification: Price breaks the bullish trend line and makes a lower low.
2. CPR Analysis: New CPR with narrow lines suggests a trending phase.
3. Entry: After price rejects the CPR, enter a short position.
4. Stop-Loss: Place at the upper CPR line or swing high.
5. Take Profit: Target the previous swing low with a risk-to-reward ratio of at least 1.5.

Conclusion

The CPR indicator and pivot points provide a powerful method for identifying trends and entry points. By understanding how to read the CPR indicator and considering the width of the CPR, traders can make more informed trading decisions. Happy trading!

Author: Simeon Bala

An Information technology (IT) professional who is passionate about technology and building Inspiring the company’s people to love development, innovations, and client support through technology. With expertise in Quality/Process improvement and management, Risk Management. An outstanding customer service and management skills in resolving technical issues and educating end-users. An excellent team player making significant contributions to the team, and individual success, and mentoring. Background also includes experience with Virtualization, Cyber security and vulnerability assessment, Business intelligence, Search Engine Optimization, brand promotion, copywriting, strategic digital and social media marketing, computer networking, and software testing. Also keen about the financial, stock, and crypto market. With knowledge of technical analysis, value investing, and keep improving myself in all finance market spaces. Pioneer of the following platforms were I research and write on relevant topics. 1. https://publicopinion.org.ng 2. https://getdeals.com.ng 3. https://tradea.com.ng 4. https://9jaoncloud.com.ng Simeon Bala is an excellent problem solver with strong communication and interpersonal skills.