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It is not as popular as pin bar or other simple setups, but in majority cases it works out just as well as others. PPR cannot be called complex and learning to recognize it is very easy. So it is not superfluous for binary option traders to know about the PPR and what to do with it when it appears on the chart.
The structure of the Pivot Point Reversal pattern consists of at least three candles and can be bearish or bullish. Its appearance on the chart warns about reversal of the latest directed trend. It is better to ignore the price formation if at least one candle is different from the criteria stated above.
Formation of the Blind reversal appears when strength of the current trend is gradually fading. When the thirds bar does not update the extremums of the second bar, it confirms the loss of strength, and after it closes below the extremums, a trader can be certain about the final loss of initiative. The majority of market participants sees the loss of strength and opens contracts in the opposite direction, shaping a signaling candle.
Then more traders gain confidence in the turn, enter the market and thereby give more strength to the reversal movement. Before trading on the setup, a trader should make sure that a setup has an anchor — support level for bullish pattern and resistance level for bearish pattern. The presence of horizontal levels is a necessary condition.
Trading options on PPR is possible either at trend reversal or at the end of correction movements. In both cases the presence of trend is imperative. Trading on the pattern when the price is in its sideways move can be too risky. If there is a solid trend on the chart and the price entered into consolidation period, there is frequently a Blind reversal at the end of it.
Consider the following example:. The chart above demonstrates an upward trend with deep corrections, one of which is formed in the shape of bullish Pivot Point Reversal. Although big sized corrections mean uncertainty of the trend, if there was a contract opened at the pattern, it would have been profitable. In general, trading on PPR during the correction is quite reliable, but the pattern appears more frequently on highs and lows of trends.
The screenshot above shows the Blind reversal, but as the maximum was not updated in the nearest future, the resistance level is not visible. But if we look at a senior timeframe, we can see rather strong level:. The price always remembers such strong levels and a trader should analyze senior trends regularly. Often, the second bar in a Blind pattern can be shaped in a form of doji candle or a pin bar. Then the signal is considered to be amplified.
This entry method is somewhat risky, but when the second candle is shaped in the form of another reversal pattern, it can be safely used. If a trader is not risk averse, he may enter the market right after the first pullback. But then it is possible that he will miss a lot of quality signals. As to expiration time, the best setting would be equivalent of seven candles. For example, if the pattern is formed on a chart with a 1H timeframe, then expiration time should be 7 hours.
In practice Pivot Point Reversal patterns demonstrate surprising results. And if one trades on PPR with strong levels and following the trend only, then the ratio of profitable and loss-making options will significantly incline to profit. Despite this, many investors make a serious mistake by not trading on the Blind reversal.
And Yulanta Business Ltd, with registration number , address: Iniziare a guadagnare denaro Accedi. Pivot Point Reversal pattern.