Quote Originally Posted by Charl View Post
Hello Billy,

Observing that IWM, SPY and QQQ is currently trading around their respective longer timeframe Pivot Points (SPP/QPP/MPP) in confluence and that from Person work (Forex Conquered) he defines:
1.The Pivot Point is the focal price level/mean and regarded as the strongest of the support and resistance numbers.
2. Prices normally trades above or bellow the Pivot Points before breaking in one direction or the other.

Can we apply this theory to all the longer time frame Pivots Points (SPP/QPP/MPP), and consider a strategy that we could expect a clearer market direction/trend to develop once the "bosses at the beach" return to work ?

Regards

Charl
Charl,

I don’t really agree with John Person that the PP points are the strongest supports or resistance areas. It is only true in sideways trading ranges, as the PP points are simply the equilibrium levels of the previous periods on all timeframes. Once a trend is building up in one timeframe, the other levels in that timeframe become much more important.

In my discretionary trading, I put maximum emphasis on R3 or S3 levels since statistically, prices approaching or hitting these levels on any timeframe have 95% chance of reaching their maximum extension for the period. That’s where resistance/support is maximal in a trend and where an inflection/reversal becomes highly tempting for market makers.

The fact that IWM, QQQ and SPY are all gyrating around their MPP, QPP and SPP simply confirms the sideways trading range of the current market, providing more mean-reversion than trend-following trade opportunities. The indices are near their equilibrium levels on those timeframes, but are far above their YPP, keeping the yearly uptend bias intact. The next big move out of the current area, up or down, will likely confirm the direction chosen by the largest players. The 20 DMF will play a major role in helping us tracking their choices.
The messy political and perceived risk environment during summer doldrums will tend to paralyze decision-makers until September and we could swing back and forth around the PP points until then.
Billy