Central Pivot Range Indicator

Pivot points have been used as a reliable trading signal for quite some time, but recently, the central pivot range (CPR) indicator has gained a lot of traction. Central Pivotal Range, often known as CPR, is a popular indicator used by traders of all experience levels and timeframes to make informed decisions about stock buying and selling.

Contrary to popular belief, the CPR Indicator is not only useful for day trading. Traders of all experience levels use the CPR Indicator for both short-term and long-term strategies. Let’s get started learning about the Central Pivot Range (CPR) Indicator.

What is the Central Pivot Range Indicator

To find key levels at which to enter or exit a trade, traders utilize the Central Pivot Range (CPR) indicator. Traders can use the chart’s levels to direct their trading activity. Its adaptability and ease of use have made it a favorite among traders. Traders like it since it can be used in a wide variety of situations and is simple to grasp. On the chart, there are three levels for the CPR indicator.

The three components of CPR are:

  • Pivot
  • Bottom Central Pivot (BC)
  • Top Central Pivot (TC)

These are derived out of the underlying High, Low, and Close calculations –

  • Pivot = (High + Low + Close)/3
  • Bottom CPR = (High + Low)/ 2
  • Top CPR = (Pivot – BC) + Pivot

TC represents the greatest level of CPR, the pivot represents the midpoint, and BC represents the lowest level when applied to a security’s price charts. Depending on market circumstances, TC’s value may be less than that of BC. Regardless of the method used to arrive at the figures, TC is the biggest and BC the lowest.

Central Pivot Range Strategy

A trader can enter the market if and only if the security’s market price stays higher than the TC level in CPR, indicating a bullish outlook for the security. The trader should now search for entry points to buy, with the TC level being a potential area of support.

In a similar vein, if a currency or asset is trading below the “Bottom Central Pivot” (BC), it is considered to be “bearish”. Any time the current market price is lower than BC, bearish sentiment is present, signaling the need to hunt for selling opportunities.

Traders can get the edge they need to execute winning trades with the help of CPR’s ability to accurately identify market trends. In addition, trading is possible so long as the security’s price does not move outside of the pivot range. But this is seldom used by traders.

Buy Signal

Central Pivot Range Indicator Buy Signal
Central Pivot Range Indicator Buy Signal
  • You could look to open buy orders when the current market price is higher than the ‘Top central pivot’ (TC).

Sell Signal

Central Pivot Range Indicator Sell Signal
Central Pivot Range Indicator Sell Signal
  • You could look to open sell orders when the current market price is trading lesser than the “Bottom Central Pivot’ (BC).

Central Pivot Range Strategy Pros & Cons

Pros

  • The candlestick pattern can be identified with the aid of the candle.
  • If you’re having trouble recognizing the S&R pattern, CPR can help.

Cons

  • It is not the most simple forex strategy you will find.
  • Requires lots of initiative on behalf of the trader.

Conclusion

With the help of CPR indicators, traders can determine if the market is trending upwards or downwards and then enter the market at the right time. If the stock price is rising faster than the TC, that’s a bullish sign. Conversely, if the stock price remains consistently below the BC line, this is a very bearish sign.

Using a stop loss is another crucial strategy in trading. This is crucial for novice traders since it limits their losses and ensures a minimum profit before they can sell their stocks. You are encouraged to take what you have learned from this blog and apply it as effectively as possible in the real world.