DailyFX.com -

Talking Points

  • Lack of volatility can provide range trading opportunities
  • Traders can look for market turns at support & resistance values
  • Traders can use an oscillator, like CCI, to time market entries

The idea of trading short term market reversals is a popular one, especially in low volatility environments. Traders that are aware of the current market conditions can take advantage of the absence of any distinguishable trend by first identifying key levels of support and resistance and then trading accordingly. Today, we will review how to scalp intraday reversals and ranges using Camarilla pivot points.

Learn Forex – USDCHF Pricing Range

Trading Intraday Market Reversals

(Created using FXCM’s Marketscope 2.0 charts)

Find Support & Resistance

Markets are prone to turn at existing points of support and resistance, so identifying these points is critical. One easy way to identify support and resistance for scalping is with the use of Camarilla Pivot Points. Camarilla Pivots are calculated using percentages of the previous day’s trading range and when added to the graph creates a clear idea of where price may be supported or resisted.

As seen above, Camarilla Pivots label resistance lines R1-R4, and support lines S1-S4. R4 and S4 are considered extremities in price denoting a breakout in price. Traders looking for short term reversals should primarily focus on price moving between the S3 and R3 pivots. This is known as the trading range, and can afford traders short term day trading possibilities if price stays between these values. Let’s look at how a short term turn in the market can be traded.

Learn Forex – USDCHF Range Entry and Target

Trading Intraday Market Reversals

(Created using FXCM’s Marketscope 2.0 charts)

Trading Price Reversals

Now that support and resistance has been labeled on the chart, traders can begin planning their market entries. The key to trading price reversals is to sell the market as close to a value of resistance as possible. Conversely traders should look to buy the market as price approaches support. Traders can select to use market orders, entry orders, or even employ the use of oscillators to facilitate their entries. Regardless of the methodology employed, the key isto remember that the market can continue ranging and turning, as long as the R3 and S3 pivots remain valid.

Next, traders must plan to exit the market. Stop orders can be placed outside of the S4 and R4 values. Since price would be reaching a breakout at that point, traders should no longer be looking for price reversals at these points. Conversely, traders should also prepare to take profit. This can be done in accordance with traditional range trading strategy. Traders buying support can look to take profit at resistance and vice versa for a sell based position.

Practice Your Trading

As with any strategy, it will take time and practice to develop new trading techniques. To practice setting up orders using Camarilla Pivots, register for a FREE Forex demo with FXCM. This way you can develop your scalping techniques while tracking the market in real time.

Click HERE to Register Now

Related Articles
  1. Forex Education

    Four Currencies Under the Spotlight in 2016

    With currencies having become the “tail that wags the dog,” in terms of their impact on the global economy, these four currencies will be under the spotlight in 2016.
  2. Forex Fundamentals

    These Currencies Are The Biggest Losers Of The Stock Downturn

    Here’s a list of the hardest-hit currencies amid the global stock market mayhem.
  3. Forex Strategies

    Will the Euro Continue to Rally? (EUO)

    The euro is rallying. Should investors chase this performance or is the real opportunity on the other side of the trade?
  4. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  5. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  6. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  7. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  8. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  9. Investing

    Financial News Comparison: Bloomberg Vs. Reuters (BAC, GOOG)

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  10. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
Trading Center