Multi Time-Frame
Pivot Analysis
Many of you are familiar with Pivot Point analysis, which is
a mathematical derivation based on previous price action. It defines levels of probability for likely
future price action. Market Makers have often used Pivot Points across multiple time frames
to find common adjacent levels between time frames that served as confluence
zones - stronger levels of resistance or support ,than a single area alone.
Have you ever noticed that price stops or rises to a certain
level that never particularly coincides with a previous level of support or
resistance? Oftentimes you will find
that those levels coincide with prices calculated at a multi-time frame level.
I regularly employ charts of the SPY and IWM that map these
levels, along with significant Fibonacci retracements, to define levels that
may affect price action should they reach those levels. Sometimes single levels end up affecting
price action, many times, areas that contain multiple levels from multiple time
zones, serve as confluence zones that are more likely to affect price.
Be warned, these levels are not predictive, but they do
provide areas that may warrant your attention as price action approaches them. I will provide on a weekly basis, these levels
for the SPY and IWM, and will hopefully provide a recap of how those levels
played out at the end of the week for the SPY to illustrate the concept. So...
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Pivot levels will be demarcated in Yellow and
noted as Weekly, Monthly, Quarterly, Semesterly, Yearly.
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Resistance levels will be in progressively
darker blues. The darker the color, the
longer the time-frame.
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Support levels will be in progressively darker
reds.
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Fibonacci levels will be
◦
Red-most recent swing low or high
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Turquoise-from July '10 swing low
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White-from March '09 swing low to April '10
swing high
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Green- (SPY only) from 2007 high-2009 low.
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The 50 SMA and 200 SMA will be labeled (remember
these will change daily so you will need to import the format links to adjust
them)
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I will also provide subjective price levels as
defined by the price action..I have found that some price levels, contrary to
“Candle Theory”, will continue to have some significance even after they have
been eclipsed.
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You will also find links to import the format
into Freestockcharts.com, and you may amend them as you see fit.
The charts will look very busy on larger time-scales. They are primarily designed to be used for
the upcoming week. The 15-30 minute
scale is optimum.
For the first installment, let's do an overview of the last week. Then we will look into the next week's expectations.
SPY Multi Time-Frame review for week of 9/11
1.
Between the 12th and 13th
the 61.8% retracement off the July '10 low served as the low
2.
The yearly pivot point put a lid on the
swing high at the beginning of the 13th
3.
The 23.6% retracement served as support for the
13th with...
4.
Support being handed off to the weekly pivot
point.
5.
Weekly R1, served as a breakout level on the 14th,
and then support based on the hammer
closing above the line.
6.
The 38.2% retracement served as support on the 15th and somewhat
fuzzy support on the 16th.
7.
On the 16th price action oscillated
around the confluence zone of the 61.8% retracement of the 2007 high-2009
bottom, and the Monthly Pivot Point
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We can also see that the 120.90 area served as
resistance and support for price action.
This level first became significant on the 2nd of
September.
SPY/IWM Multi-Time Frame Pivots week
of 9/17
Before we consider the charts just a couple of macro
comments to keep in mind:
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The Fed has promised Europe to print an unlimited amount of dollars to support their banks.
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The Fed has a Two day meeting this week. Not the usual one. There must be something relatively large on the agenda for which the bearded one is trying to build consensus
Therefore, it's a reasonable assumption that we will
get an announcement that will push money towards the risk trade, therefore
stocks are likely to continue higher to test the August 31 SPY swing high with
the next target being the upper boundary of the recent price channel. That swing
high has a relatively strong confluence area starting at 123.00 with the 38.2%
retracement of the July '10 low followed by the descending 50 sma, price action
resistance then comes into play at 123.60. Above that, we're into the weekly
resistance levels.
For IWM, there is a relatively strong confluence
area prior to the peak of the 8/31 price action, but I would expect IWM to be a
good doggy and follow the pack leader higher.
Nemo
