Trend Lines by Pivots

How to use the Trend Lines by Pivots indicator for trading:

This indicator is based on drawing two trend lines:

Upper trend line (red): connects two consecutive Pivots Highs.

Lower trend line (green): connects two consecutive Pivots Lows.

Buy signals:

Breaking the lower trend line (green) upwards: When the price breaks the lower trend line upwards, this is a potential buy signal. This break indicates that the downtrend has ended, and a new uptrend may start.

Sell signals:

Breaking the upper trend line (red) downwards: When the price breaks the upper trend line downwards, this is a potential sell signal. This break indicates that the uptrend has ended, and a new downtrend may start.

Key points:

Confirm signals: It is important to confirm buy and sell signals using other indicators or additional technical analysis tools. Do not rely solely on this indicator to make trading decisions.

Risk Management: Always set Stop Loss and Take Profit levels to manage risk and protect capital.

Indicator Testing: Before using the indicator in real trading, test it on historical data (Backtesting) or on a demo account (Demo Account) to evaluate its performance and better understand its behavior.

Adjusting Settings: As I mentioned earlier, you can adjust the leftLen and rightLen settings to change the sensitivity of the indicator. You may need to experiment with different values ​​to find the settings that suit your trading style and the financial instrument you are trading.

Example:

Imagine that you are watching the chart of a certain stock. The indicator has drawn an upper trend line (red) and a lower trend line (green).

Buy Scenario: If the price is trading below the lower trend line (green) and then breaks it upwards, you might consider opening a buy position, with a stop loss placed below a recent low.

Sell Scenario: If the price is trading above the upper trend line (red) and then breaks it downwards, you might consider opening a sell position, with a stop loss placed above a recent high.

Conclusion:

The Trend Lines by Pivots indicator is a useful tool for identifying trends and potential reversal points. Use it in conjunction with other technical analysis and risk management tools to make informed trading decisions. Remember that this indicator, like any other, is not perfect, and you should always check and confirm signals before entering any trade.