Ask Colin

In your January 2003 Shares article you discuss pivot point reversals. Can pivot points take a more complex form?

In your January 2003 Shares article you discuss pivot point reversals. Can pivot points take a more complex form?

Yes they can, but you will realise that I have only limited space in the magazine articles, so I was only able to do justice to the simple form. As it was, the editors left out a diagram that explained the theory.

Complex Pivot points are explained in a Stockwatch article on my subscription web site. I will also be covering them in Shares Charting Guide No 3 due out late in 2003.

The one-minute explanation is that a complex pivot point takes this form:

1. A bar with a high that is higher than the high of the bar immediately before it and immediately after it.

2. The complex pivot point reversal signal occurs on the first bar after that with a close below the low of the high bar.

3. This can take many bars to resolve. However, if the price moves above the high bar, the pivot point ceases to be a possibility.

In my opinion, the more bars it takes to complete the signal, the weaker the signal, especially if some of the intervening bars have lows below the low of the high bar.

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