Pivot Point Multi Time Frame Indicator
Pivot points are one of the favorite tools for short term trades. Originally started by the floor traders at the Chicago board of futures, pivot points have become one of the most widely used technical indicators in the markets today.
Unlike other technical indicators, pivot points change depending on the time horizon to which they are applied. The pivot points, as the name suggests are price points where the price is likely to pivot. Typically, pivot points are used on the one hour or lower time frame charts.
The values are plotted based on how price behaved in the previous day or during the previous session. Based on the open, high, low and close, the current day’s pivot points are plotted.
The pivot points comprise of the pivot line, which is the mid-point. Following this, there can be three or more support and resistance lines that are plotted on the chart. Depending on how strong price action, you can expect the price to break past these different levels of support and resistance easily.
The basic premise of the pivot point lines is that price tends to reverse near one of the support or the resistance levels. In most cases, under normal conditions, the price also consolidates or pivots around the midpoint price level for the day.
As a result, pivot points in a way represent the day’s support and resistance levels. As you might know, support and resistance levels are key in price action. Because price doesn’t move in the straight line, you can expect to see different levels of behavior depending on whether price hit the fifth resistance or support level or the first.
Pivot points have evolved over time such that now you can find different types of calculations. Besides the classic or the standard pivot point, you can also calculate the pivot points based on Fibonacci values, Woody’s method and so on.
But do not get too confused with the type of pivot point indicator you are using. Regardless of the minor difference in the calculation, they are more or less the same.
One of the major drawbacks with the pivot point indicator is that it can be plotted across different time frames. For example, you can calculate pivot points based on daily charts as well as monthly or even weekly charts.
Some traders prefer to have all this information being displayed on the chart time frame they are using. In other words, instead of the traditional way of using just the daily pivot points on the one hour chart time frame, some traders prefer to use the weekly and monthly pivot points as well.
This is where the MTF pivot point indicator comes into play. The multi time frame pivot point indicator plots all the different pivot values calculated from different time frames onto a single chart.
This eliminates the need for having to switch between time frames or having to use the pivot point indicator three times to get the same information.
Using the MTF pivot point indicator on the MT4 charts
The MTF pivot point indicator is a customized indicator. You can download the indicator from this article. Install it onto your MT4 trading platform. Once the indicator is activated, you can then drag and drop it onto the chart of your choice.
The configuration window of the MTF pivot point indicator is shown below.
MTF pivot point indicator configuration
As you can see from the above configuration window, the settings are relatively easy to use. We explain the different values below.
Midpivots: By toggling between True or False you can enable or disable the mid pivot points. This is mostly a matter of personal preference. It doesn’t quite give you any big advantage in the markets, but still, some traders prefer to use this setting.
Fhr: This is the Fibonacci pivot points. Toggling between True or False you will be able to shift between the custom values. Note that enabling this will plot additional horizontal lines on your chart.
Daily: As the setting indicates, using this will display the daily pivot points on the chart. Note that when you use the daily pivots, it is applicable only for time frames of one hour and lower.
Weekly: Enabling the weekly pivot point to true will automatically display the weekly pivot points on the chart.
Monthly: The monthly pivot points will show you the monthly pivot lines on the chart time frame that you are currently using.
InpChartShift: This setting is merely a cosmetic setting. Using the shift, you can set up where you want the values to be plotted on the chart.
LabelShift: The label shift allows you to move the labels around the chart.
Once you have configured the MTF pivot point indicator, this is how it looks on the chart below. In the below chart, we are also using the mid pivot points.
MTF Pivot points
Using this on the one-hour chart time and using the session divider, you can see the various pivot point values on a single chart. This is what makes the MTF pivot point indicator unique.
Note that using too many values can end up cluttering your chart and can make price action very hard to read. When you combine with additional technical indicators, especially those that overlay on the chart, it can become a lot more difficult.
Therefore, keep the settings of the MTF pivot point indicator to the bare minimum. The general consensus is that the pivot points from the higher time frames are stronger compared to the pivot points from the daily time frame.
Traders can use the MTF pivot point indicator as a way to replace the support and resistance levels which requires a bit more advanced knowledge of using price action based methods.
The MTF pivot point indicator is certainly a good tool to have in your trading toolkit. It can instantly show you the various pivot points depending on the different time period configuration that you use. It is ideal for both short term day traders as well as swing traders.