How Institutions Using CPR Indicator?

    How Institutions Using CPR Indicator?

 What is Pivot Point?

Pivots are purely derived from the price, used and trusted by professionals, big players and institutions.

Pivot points are nothing but support and resistance level calculated based on the average price of the previous day’s high, low and close.

Weekly pivots are calculated based on the average price of Previous week’s high, low and close, similarly the monthly pivots are calculated based on the average price of the previous month’s high, low and close.

Knowing the key levels of support and resistance of any particular stock or index will be an edge in day trading.
 

How CPR differs from the Pivot Points?
 
Pivot Point is a single line with Support (S1, S2, S3) and Resistance (R1, R2, R3) levels, but CPR is not a single line Pivot, which has TC- (Top Central Pivot) and BC- (Bottom Central Pivot) along with the central pivot Point.

 
Central Pivot Range is a leading indicator; this type of leading indicator has some form of forward-looking abilities. By plotting Central Pivot Range (CPR) on your chart, you can predict the behaviour of the stock for the upcoming days.

 
By knowing the opening location of price based on the Central Pivot Range, we can predict the bias of that stock or index in that particular day. What is mean by the bias of a stock? Based on the three conditions which I mentioned below, you can easily identify whether the stock is in Bullish Bias, Bearish Bias or in a neutral Bias.
 
 
 
Condition 1 Market Opens Below CPR Level

If the market opens below the pivot range and makes a move upwards it will meet resistance at that level.

If the market opens below the pivot range and makes a Breakout the CPR level, then it is Bullish Shift, we can expect further up move from there in that particular stock or index.

 
Condition 2 Market Opens Above CPR Level

 If the market is above the pivot range and makes a move downwards it will meet support at Central Pivot Range.

If the market opens above the pivot range and makes a breakout the CPR level, then it is Bearish Shift, we can expect further down move from there in that particular stock or index.

 
Condition 3 Market opens in the Central Pivot Range

 If the price opens within the pivot range, we can consider the stock or index is a neutral state.