Testing Pivots

The most profitable short-term trading opportunities are trading the market's reaction to tests of high and low pivots. However, I prefer to define a pivot as an actual price point where the market has defined support or resistance. In other words, an actual turning point in the price chart. The calculated pivots, such as the floor trader pivots, are theoretical and based on absolutely nothing.

At the beginning of the day on Friday, the ES 2-day Rate of Change had uptrended for two days, which is where short-term traders start taking short term profits. Therefore, Friday was a day to look for short trade opportunities.

On Thursday, a high pivot of 1263 was created. On a day that you susspect selling pressure based on the 2-Day ROC Analysis, look for a short trade opportunity whenever the market tests the high pivots, which in Friday's situation was whenever the market tested the 1263 area.

Charles