There are various relationships and patterns associated with the Pivots. They provide information to the day trader or the strategic player.
PATTERN 1: BUY SIGNAL
- The low is less than the 1st deviation pivot down
- The high is greater than the 2nd deviation pivot up
- The market has tried to move higher and failed.
- The close is less than the opening.
- The close is greater than the 3-period moving average
PATTERN 2: PROBABILITY
- Price goes beyond both 2nd deviation pivots
- The relationship between the open close dictates the bias between up and down
The key question apart from accuracy is how often this happens.