Central Pivot Range (CPR) Trading Strategy
In this article, I am going to discuss Central Pivot Range (CPR) Trading Strategy i.e. Price Action Trading Using CPR. Please read our previous article where we discussed Pivot Point Trading Strategies i.e. How to Day and Swing Trade Using Pivot Points.
What is Central Pivot Range (CPR) Indicator?
The Central Pivot Range or widely known as CPR. Traders can use it for intraday as well as swing or positional. CPR acts as a support or resistance. it can forecast trends and trending or sideways markets. CPR gives traders the advantage of FORECASTING the trend in order to make a profitable ENTRY
Calculation of CPR (Central Pivotal Range)
Central Pivot Range is an average price that is calculated using yesterday’s (high, low, close) trading session and applied to the current trading session. As Central Pivot Range is based on past data It does not change and fix in all time frames. Central Pivot Range as dynamic support and resistance FOR different traders. CPR can be calculated as daily, weekly, monthly, or yearly depending on your trading style.
- Investors – Yearly Levels
- Position Traders – Monthly Levels
- Swing Traders – Weekly Levels
- Day Traders – Intraday Levels
What are these three lines now?
Calculating the 3 different pivot points within the CPR is as follows,
𝗣𝗶𝘃𝗼𝘁 Point = (High + Low + Close)/3
𝗕𝗖 (Bottom central pivot point) = (High + Low)/2
𝗧𝗖 (Top central pivot point) = (Pivot – BC) + Pivot
R2 = PP + (high-low)
S2 = PP – (High – Low)
R3 = High + 2(PP-low)
S3 = Low – 2(High – PP)
How does CPR differ from traditional Pivot Points?
The traditional pivot points generally have one central pivot line surrounded by support (S1, S2, S3) and resistance (R1, R2, R3) levels. Central Pivot Range (CPR) consists of 3 levels (a central pivot point (pivot), a top central level (TC), and a bottom central level (BC)). usual support and resistance lines are above and below CPR as shown below:
How Central Pivotal Range CPR) works? How to interpret CPR?
Finding Overall trend using CPR
CPR can be used in finding trends.
The uptrend in Central Pivotal Range Trading Strategy
- When the CPR makes higher highs every day (CPR is one above the other) that indicates that the particular security is in an uptrend.
- the trend is bullish so our intention should be on the long side. follow the overall trend because the trend is your friend. The PREVIOUS DAY’s LOW should not be broken, if it is broken, we can expect a trend reversal.
- And the entry methods are pull back or retracement to CPR or R1 breakout. check here the pivot point strategy
Some examples of uptrend in a 5-minute time frame
Downtrend in Central Pivotal Range Trading Strategy
- When the CPR makes a lower low every day (CPR is below the other) that indicates that the particular security is in the downtrend.
- When security is in a downtrend, you should always look for shorting opportunities. follow the overall trend because the trend is your friend. PREVIOUS DAY HIGH should not be broken, if it’s broken, we can expect a trend reversal.
- And the entry methods are pull back or retracement to CPR or S1 breakout. check here the pivot point strategy
Some examples of down in a 5-minute time frame
Sideways in Central Pivotal Range Trading Strategy
- When the CPR is moving up and down (one day it is up, and the next day it is down), that means the stock is in a sideways trend.
- We cannot identify a proper trend in this stock; thus, we can consider the stock is in a sideways trend.
- If you are a beginner, you should avoid trading in sideways stocks as there is a high probability of stop-loss hunting in these stocks.
HERE IS THE PRICE CHART WITH CPR
Finding Future trend using CPR Trading Strategy
Analyzing the width of CPR (Central Pivot Range), you can easily predict the trend of any security. We can divide the width of the Central Pivot Range into three types.
- Narrow Range CPR
- Medium Range CPR
- Wide Range CPR
Narrow Range CPR (Central Pivot Range) Trading Strategy:
When the width of the Central Pivot Range is narrow, it means that the stock was within a small range in the previous day, week, or month, depending on the CPR you are using.
consolidation or sideway move in yesterday so can expect a breakout and trending move today. We can say that whenever there is a NARROW CPR, we can expect a good trending day today or tomorrow. So, if you are trading stocks for intraday or swing find narrow CPR for breakout trading. Below are some examples of narrow CPR
Medium Range CPR (Central Pivot Range) Trading Strategy:
When the CPR has a medium range (neither too narrow nor too wide), we can consider the CPR as a Medium range CPR. A medium-range CPR indicates that the security may or may not trend as like narrow CPR.
Wide Range CPR (Central Pivot Range) Trading Strategy:
When the range of the CPR is very wide, it means that the stock was trending within a big range in the previous day. When any stock was trending in the previous day, we can expect some cool of(pullback/consolidation).
Due to the trending day, today’s CPR will mostly be a wide-range CPR. Thus, we can say that whenever we see a wide range of CPR, that indicates a high possibility of a sideways day or range day.
Multiple Time Frames using CPR Trading Strategy
- PRICE above both higher timeframe and lower time frame CPR is bullish (opposite for bearish)
- PRICE above CPR of the higher time frame and below of lower time frame, range-bound or consolidation
Support and Resistance
The Central Pivot Range acts either as a support or as a resistance depending upon the market trend. IF HIGHER CPR MEANS A BULLISH TREND. WE EXPECT TO PRICE RESPECT Central Pivot Range AND CONTINUE WITH THE BULLISH MOMENTUM.
How to trade with CPR or Central Pivotal Range?
CPR BULLISH ENTRY METHOD
- Use 5 mins time frame for intraday trading. Add CPR indicator.
- If the price is above CPR and HIGHER HIGH CPR then wait for the retest OF CPR.
- If the price retests CPR from the upper side and forms a bullish REVERSAL candle AT CPR
- then you have to buy that stock ABOVE BULLISH reversal candlestick pattern
- Stoploss will be candle’s low ALONG WITH just below the lowest CPR.
- TARGET NEXT PIVOT (R1/R2 IN UPTREND)
Let us see some examples.
In the next article, I am going to discuss Swing Trading Strategy Using Pivot Point. Here, in this article, I try to explain Central Pivot Range (CPR) Trading Strategy i.e. Price Action Trading Using CPR. I hope you enjoy this Central Pivot Range (CPR) Trading Strategy article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.