When price penetrates a pivot number, it often retraces back to the pivot, and touches it
briefly. If it was support that was penetrated, and it does not move back up above it, but
continues to hover just below it, there is about to be a drop in price. At the point that it
retraces after dropping below support, enter a sell with a modest stop loss somewhere on
the other side of the broken support line. Notice the illustration below of the USD/JPY at
2 am EST. The price had just broken below the S2 number, which was 123.38. It briefly
touched the 123.38 to 123.41 area and then began to descend. As you can see, it moved
down all through the European and US market sessions.
This USD/JPY trade exhibits a problem sometimes encountered. Price either moves
higher than the R2 or lower than the S2 number. At that point, it is best to re-calculate
the numbers, or monitor the trade based on its relationship to weekly pivot numbers.
No comments:
Post a Comment