This is a trading system that I use primarily on the Swiss Franc (USD/CHF) in the Spot Foreign Exchange market. I will outline the
system as I apply it to the Swiss Franc, hereafter known just as USD/CHF.
WHAT YOU NEED
1. Five-minute and 1-hour charts for the forex currencies. The 1-hour chart helps define the intraday trend and the five-minute is used
for entry and exit.
2. Indicators: The 9 and 18 Exponential Moving Averages on both the 5-minute and 1- hour charts. The MACD on both the 5-minute
and 1-hour charts.
3. Pivots calculator or pivots calculation which provides not only the Pivot, R1, R2, S1, S2, but also the M1, M2, M3, M4 points as
well. It is common to find many commodities futures traders calculate only the Pivot, R1, R2, S1, S2 points. Often, in the forex
market, these minor points of support and resistance are very significant, and most of the time there seems to be no difference in their
significance.
There is some difference in which 24-hour time frame to use to compute the daily open, high, low, close numbers. MG Forex begins
their 24-hour day at 3 pm EST, and concludes the next day at 3 pm EST. FX Solutions’ 24-hour day is 12 am EST until 12 am the
next day. WebTrader daily charts are calculated upon 2400 GMT to 2400 GMT. Of all the times that I have reviewed to calculate the
daily numbers, 3 pm EST to 3 pm EST seems to have the best consistency for the forex market. I believe the reason is because this
coincides with the opening of the Australian, New Zealand markets, which technically represent the first markets of the day to open,
followed by the Asian, then the European, and finally the U.S. market.
There is one exception to my usage of this time frame. At 3 pm EST, I will calculate the new Pivots based on the completed 24-hour
period, and if the prices move up or down significantly during the Australian and Asian sessions so that they come close to exceeding
the R2 or S2 numbers before the start of the European session, I will recalculate them at 2400 GMT (8 pm EST), or even later at 12am
EST. This way I have a fresh set of pivot numbers for the European and U.S. market sessions, which I trade.
The latest numbers for daily volume in the Global Foreign Exchange market say that between 2 trillion and 7 trillion dollars a day
change hands! This is up from the normally quoted numbers of 1.5 trillion and 2 trillion. Because of this, even time frames such as
the late U.S. market hours and early Australian and Asian time frames are producing significant market movement. A year or so ago
these time frames produced very little market movement, and were not usually the best times to trade, but that is changing. I trade
from the Frankfurt opening (11 pm PST) or the London opening (12 am PST) to 9 am PST, the mid-point of the US market time
frame. This normally produces profitable market movement.
At 11 pm PST, I see where the prices are located. Generally, they have not moved too much since 3 pm EST, and I await a fresh break
of one of the pivot numbers. The times on the charts that I use for illustration purposes are Eastern Standard Time. Therefore, 2 am
on the charts is the beginning of the time frame I use.
http://fx-daytrader.blogspot.com
Forex Intraday Pivots Trading System
Linear Mode
