The CPR is a popular intraday indicator that traders use daily.
A thread 🧵 on CPR trading strategy.
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📍What is CPR?
The Central Pivot Range is widely known as CPR. Traders can use it for intraday, swing, or positional trading
The CPR levels help traders to foresee the movements in stock prices & to predict the trend and also provide us with major support and resistance levels
📍How is CPR calculated?
The three levels of the CPR indicator and the formula for calculating them are listed below.
Pivot point = (High + Low + Close) / 3
Top Central Pivot Point (TC) = (Pivot – BC) + Pivot
Bottom Central Pivot Point (BC) = (High + Low) / 2
(S1) = (2 * Pivot) – high
(S2) = Pivot – (High – Low)
(R1) = (2 * Pivot) – Low
(R2) = Pivot + (High – Low)
📍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.
Whereas, Central Pivot Range (CPR) consists of 3 levels (a central pivot point (pivot), a top central level (TC), and a bottom central level (BC) surrounded by support (S1, S2, S3) and resistance (R1, R2, R3) levels.
📍Types of CPR
There are two types of CPR:
👉 Narrow CPR- Whenever there is a narrow CPR, the market will be trending or volatile.
If the market is not trending or volatile despite narrow CPR, then the next day or in 2 days market will be trending.
In the 1st image below, we have a narrow CPR, and hence the market was trending.
In the 2nd image, we have a narrow CPR but the market was sideways as marked by the rectangle box.
The very next day, we have a trending market as marked by the yellow arrow despite wide CPR.
👉 Wide CPR
Generally, whenever there is wide CPR, mostly the market will be sideways or range bound.
In the image below, we have a wide CPR and therefore the market was range bound as marked by the rectangle box.
📍Ascending CPR
When the CPR makes higher highs every day, it indicates that the particular security is in uptrend.
Whenever there is ascending CPR, look for long positions.
In the below image, we have an ascending CPR and hence the market was in uptrend as marked by the arrow
📍Descending CPR
When the CPR makes a lower low every day, it indicates that the particular security is in a downtrend
Whenever there is descending CPR, look for short positions
In the image,we have a descending CPR and hence the market was in a downtrend as shown by the arrow
📍Sideways CPR
When the CPR is moving up and down that means the security is in a range bound.
In the image below, we can see CPR is moving up and down, hence the market is rangebound or sideways as marked by the rectangle box.
📍Virgin CPR
When the price fails to touch the CPR even once in a session, then it is called Virgin CPR.
Virgin CPR acts as support and resistance.
If there is virgin CPR, then on the next day we can expect a reversal from the virgin CPR.
In the below image, we can see the price didn't touch the CPR even once and on the next day price reversed from the virgin CPR and moved upside as marked by the yellow arrow.
📍CPR opening strategy
👉 When price opens above R1 Or below S1
If the first three, 5-minute candles are above R1, then it will be a trending day upwards.
In the image below, we can see the first three, 5 mins candle is below R1(green line), and hence the market moved upwards.
If the first three, 5-minute candles are below S1, then it will be a trending day downwards.
In the image below, we can see the first three, 5-mins candle is below S1(red line), and hence the market moved downwards as marked by the yellow arrow.
👉 When price open between CPR & R1 and between CPR & S1
If the first three, 5 mins candles are between CPR & R1, then it will be a range-bound day until R1 is broken.
In the image, we can see the first 3, 5-mins candle is b/w CPR and R1 and hence the market was rangebound.
If the first three, 5-minutes of candles are between CPR and S1 then it will be a range-bound day until S1 is broken.
In the image below, we can see the first three, 5-mins candle is between CPR and S1 and hence the market was range bound as marked by the rectangle box.
👉 When price open exactly at CPR
If opening first three, 5-min candles are exactly at CPR, then it will be a range bound market.
In the image below, we can see the the first three, 5-min candle are exactly at CPR and hence it was a range bound market as shown by rectangle box.
📍Reversal Strategy 1
If a hammer candle is formed at CPR or S1, we can expect a reversal.
In the image below, we can see a hammer candle at CPR and then immediately the market reversed and moved upside as marked by the yellow arrow.
📍Reversal Strategy 2
If a shooting star candle is formed at CPR or R1, we can expect a reversal.
In the image below, we can see a shooting star candle near CPR and then immediately the market reversed and moved downside as marked by the yellow arrow.
That's a wrap!
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