CPR a powerful indicator for trading in stock markets
Most of the traders using technical analysis with indicators like MACD, RSI, or moving averages may have experienced that these do not work at times....
Most of the traders using technical analysis with indicators like MACD, RSI, or moving averages may have experienced that these do not work at times. Yes, it's true because they are all lagging indicators. Trading based on price action is much better and yields good results, but we have to be well versed with price action strategies and quick enough to take trade decisions. In price action, we purely focus on the movement of price. This speaks volumes about its movement. If price action is coupled with a trending indicator, then the accuracy of the trade success is high.
One such trending indicator is central pivot range (CPR) with which very few are familiar. Pivots to some extent are better. Unlike other indicators, they are not lagging but leading indicators. They are static and remain at the same prices throughout the day at all timeframes. That means if Nifty pivot point is at 8500 and R1 (Resistance) pivot at 8600, then on all time frame (3-minute, 5-minute, 15-minute, 1 hour) it is the same, it doesn't change like VWAP (volume weighted average price) and other day trading indicators. Many big institutes and high net worth investors use pivot point for their day trading. Many big traders keep a watchful eye on daily pivot points as they are considered to be key levels at the intraday time frame. Because so many people are looking at those levels, they almost become powerful support or resistance in day trading.
Along with daily pivots, there are weekly, monthly and even yearly pivots, which are very important and can be plotted on the chart and can day trade effectively. Along with these daily pivots if CPR is also plotted, it becomes powerful in day trading. When there is a confluence of daily pivots with weekly and monthly pivots, it becomes more powerful. If someone wants to use pivot points in day trading, you can do back testing and then use it. If one is trading in Nifty, Bank Nifty pivot points work very well. It works on stocks and commodities also, but it needs to have good liquidity. Pivot points are calculated on the previous day price movement, adding daily high, daily low and close divided by 3. However, there is no need to get into the calculation of pivot points as most of the trading platforms like Zerodha, Upstox, Fyers provide it as an inbuilt feature.
However, CPR is a trending and powerful indicator which is not available a built-in feature on many platforms. Some famous YouTubers like Gomti Shankar and many others have decoded and uploaded it on these platforms. One has to search for it and add it in favorites to access it. CPR will be more effective if it is clubbed with moving averages. Trading view platform is the best to understand CPR. CPR is a must-try indicator for successful trading.
(The author is a homemaker who dabbles in stock market investments in free time)