In this post we show you how to trade with Camarilla pivot points. In the last post we showed you how to trade with pivot points. At the end of the post we forgot to give you our pivot point trading strategy. You see pivot points act as a magnet to the price. You will most of the time find the price move towards the pivot point and hit it. But when price misses the pivot point and fails to hit it, it is a very important signal for the start of a big move in the direction away from the pivot level.
This is how we trade our pivot point strategy. For intraday trades, we look for the price to miss the daily pivot level. When it does it is a signal for a 100-200 pip move that we can easily catch. In the same manner we look for the price to miss the weekly pivot level for swing trading. When price misses the weekly pivot, it means a 200-400 pip move. Don’t worry, we are going to write the next post on our pivot point trading strategy and illustrate it with a number of live examples. Now let’s get back to the topic of this post which is how to trade with Camarilla pivot points. Watch the video below that explains the Camarilla pivot points.
https://www.youtube.com/watch?v=UmBn97j4zL0
This is another good video on how to trade with Camarilla pivot points. This video starts with the history of Camarilla pivot points. Camarilla pivots were first introduced by Nick Scott a successful bond trader in 1989.
Above video was by Nenad Kerkez. You should also watch this Admiral Markets video on how to trade with Camarilla pivots. Below video is by another expert Chris Svorcik.
Below is a short video on how to trade with Camarilla pivots.
This is another good video about Camarilla pivots!
As said in the previous post, combining candlestick breakout patterns with these pivot levels is a very powerful strategy. You should read the previous post in which we have posted videos by Steve Nison who is considered to be an expert on trading with candlestick patterns. In these videos he explains how to combine candlestick breakout patterns with pivot levels to find explosive trades.
How to Calculate Camarilla Pivot Support and Resistance Levels?
You should also read this article trading with Camarilla pivots. Read this article as it explains how to use Camarilla pivots for finding continuation trades as well as breakout trades. Camarilla pivots are calculated differently as compared to the ordinary pivots. The following formulas are used for calculating the Camarilla support and resistance levels:
R4 = Close + (High – Low) * 1.1/2
R3 = Close + (High – Low) * 1.1/4
R2 = Close + (High – Low) * 1.1/6
R1 = Close + (High – Low) * 1.1/12
S1 = Close – (High – Low) * 1.1/12
S2 = Close – (High – Low) * 1.1/6
S3 = Close – (High – Low) * 1.1/4
S4 = Close – (High – Low) * 1.1/2
Now the levels R5 and S5 as well as R6 and S6 levels are calculated differently:
R5 = R4 + 1.168 * (R4 – R3)
R6 = (High/Low) * Close
S5 = S4 – 1.168 * (S3 – S4)
S6 = Close – (R6 – Close)
This is how you are going to use these support and resistance levels looking for reversal trades. When price open between S3 and R3, let it move to S3. Go long with stop loss below S3. Take profit target can be R1, R2 and R3. If the price moves to R3, go short when it touches R3 with stop loss above R3 and take profit target as S1, S2 and S3.
Now Camarilla pivots also tell you when you are going to trade with the trend. If price opens between R3 and R4 and price breaks above R4, enter into a buy trade in the direction of the trend.Take profit will be R5 and R6 and stop loss will be below R3. In the same manner if price opens between S3 and S4 and breaks above S4, enter into a short trade in the direction of the downtrend with stop loss above S3 and take profit target as S5 and S6. Read the above article in which the author explains it with live trade examples. Once you understand this strategy, you should first practice it on the demo account. Did you read the post on the London Close Strategy that made 182 pips in 1 day?