Considering the trending power of forex, these levels would come into play rather often. Also, what was the proper way to calculate them? If I remember correctly, was it S2 - (Hi-Lo)? Thanks for your input. Greg
Never used R4 or S4. But often times when all the others are broken I wonder where it will stop next. Are you positive on that formula?
No, I remember only that it was a cloudy derivation of s1/r1 or r2/s2 according to my book. Unfortunately I don't have my book where I am living now, so I will have to get back to you on that (just finished my weekend chart studying session, ready for bed. Will sift through google and trading sites tmrw). I will get back to you, and I appreciate anyone posting the formula if they know it. Good trading this week. Greg
The calculation for S2 is PP - Range, range is (Hi - Lo), S3 is S2 - Range, S4 is S3 - Range, and so on... However, as common-sense would suggest, it is because of the trending power of forex that these levels are very rarely reached.
Thank you for the formula. However, as further common sense would suggest, it is the trending power of forex that creates a greater probability of opens below pivot levels and the continuation of that trend without testing the pivot level, therefore allowing prices/rates to have a greater probability of reaching levels beyond s3 and r4 in comparison to other instruments.
I can't recall too many days when the E/U extended beyond the S3/R3 levels. I don't plot anything beyond that. If price happens to go beyond, I'll just use the weekly pivot levels as the next possible S/R point. Look at today on the E/U - 330pip range and price just dancing at the S2 level.
I agree with you bugscoe. My free time for trading is generally only about 3 hours per day, so I have been plotting the pivots on the EUR/JPY (asian session, not much movement on the Eur/usd during that period). So, I only provided a range for a few hundred pips, which I don't think have gone through s3 nor r3 yet (I look at overviews of the london and american session too, i don't think it's a daily concern). It is the weekly levels with large moves that I have noticed it here and there.
Certainly that could be the case if you were to calculate pivot points from the high, low and close of one particular session. However, most often the pivot points will be calculated from a full 24 hour day. Thus the full days range provides appropriately wide S and R, making it very rare for a trend the next day to be over three times the previous days range. Have a look at the last two days in which there were 100 pip gaps on opening followed by 300 pip ranges, the price still didn't reach the 3rd S or R level, let alone the 4th.
Yeah it's not going to happen all the time, but even as it approaches R3 or S3 I like to know where the next midpoint is (I find midpoints just as respected as the actual pivot in a lot of cases). It's just one of the things I like to be aware of.