Camarilla Pivot Points are (unfortunately) covered in the same mystique as Fibonacci retracement - involving higher mathematics to produce a magic formula that somehow the markets are bound to follow - well, to be honest, the math involved is more simple arithmetic than anything else.

8 levels, 4 of resistance, 4 of support, are produced, using High, Low and Close data for a preceding time period.

R4 = (H - L) x 1.1 / 2 + C
R3 = (H - L) x 1.1 / 4 + C
R2 = (H - L) x 1.1 / 6 + C
R1 = (H - L) x 1.1 / 12 + C

S1 = C - (H - L) x 1.1 / 12
S2 = C - (H - L) x 1.1 / 6
S3 = C - (H - L) x 1.1 / 4
S4 = C - (H - L) x 1.1 / 2

(There are other recipes for the coefficients to be found…)

Usage
The critical levels are the L3 and L4 levels. The standard method is to expect reversal if the price reaches an L3 level, support or resistance. This is then considered a signal to make a trade against the prevailing trend - keeping the L4 level as a stop-loss.

In addition, or alternatively, crossing an L4 level can be used as a signal for definite breakout - therefore going with the trend. The difficulty here is where to place stops…?

Totally unconvinced of their value, and included for the sake of completeness - if you’ve found a system to make Camarilla pivot points work, do let us know…

4 Responses to “Camarilla Pivot Points in Forex”

1. Costa says:

   February 26, 2009 at 3:10 pm

   Great post, but what’s so wrong about Fib retracement?

   Reply
   • Lewis Wolfe says:

     February 26, 2009 at 5:07 pm

     Hi Costa - What’s so right about it? Where’s the proof?

     I’m still happy the only way Fib levels, retracements or otherwise, work is as self-fulfilling prophecy - enough traders have them on the screens for them to have an effect…

     Reply
2. Camarilla Pivots | MetaTrader EAs and Indicators says:

   March 9, 2009 at 7:53 pm

   [...] An elaboration of the standard pivot point equation - see also camarilla pivot points [...]

   Reply
3. How To Trade Forex Pivot Points says:

   March 13, 2009 at 9:11 pm

   [...] Camarilla Pivot Points in Forex [...]

   Reply