Pivot Line Analysis Market Sentiment Indicator

v10.3
Pivot Line Analysis Market Sentiment Indicator

Analysis of today’s pivot line positions relative to yesterdays pivot line positions can give us a very good idea of market sentiment.

This simple indicator helps us see market sentiment at a glance. It can be applied on any time frame and any market.

  1. Rising Pivots. If today’s R1 is higher than yesterdays R1 and today’s S1 is higher than yesterdays S1 then sentiment is bullish.
  2. Falling Pivots. If today’s R1 is lower than yesterdays R1 and today’s S1 is lower than yesterdays S1 then sentiment is bearish.
  3. Outside Pivots. If today’s R1 is higher than yesterdays R1 and today’s S1 is lower than yesterdays S1 then the bulls and bears had a big fight resulting in increased volatility and the market may be at a point of indecision.
  4. Inside Pivots. If today’s R1 is lower than yesterdays R1 and today’s S1 is higher than yesterdays S1 then the bulls and bears had a very evenly matched fight and the market may be at a point of indecision.

A green bar indicates that yesterday was a bullish day.

A red bar indicates that yesterday was a bearish day.

A long blue bar indicates that yesterday was a more volatile day that neither side won.

A short blue bar indicates that yesterday was a day of indecision.

The latter two are of the most interest and can be used to predict possible changes of market direction.

I have written a simple strategy based on this theory which is currently under forward testing. Hopefully to be shared later!

 

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Risk disclosure:

No information on this site is investment advice or a solicitation to buy or sell any financial instrument. Past performance is not indicative of future results. Trading may expose you to risk of loss greater than your deposits and is only suitable for experienced investors who have sufficient financial means to bear such risk.

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  1. Vonasi • 285 days ago #

    I forgot to mention in the description that Sunday pivot lines are ignored and Monday’s pivot lines are calculated from Fridays price movements.

  2. AVT • 285 days ago #

    Like that, simple and clear!

    • Vonasi • 285 days ago #

      Thanks AVT. I like simple – some people would say that I do simple very well! Sometimes you don’t need all the bells and whistles to work out market sentiment.

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