Can I trade with R2? - Pivot Point Trading

Yes, you can use R2 from Pivot Points in your trading.

What is R2? It’s second resistance levels. Usually we use R1, R2 and R3 where in most cases R2 and R3 might act (not always!) as a strong resistance.

Here are few tips how you can use R2 levels in your trading to get better results.

1. R2 as take profit

You can use R2 as a take profit target. If you’re not sure if it’s the end of the move you can use partial close strategy. For example you close 50% of your position at R2 and book profit, move stop loss to break even and wait for next target (R3).

2 R2 as entry

You can also look for entry potential near R2 level. If you see that price struggle to move to the next target then you might want to wait for entry singal. Remember that you don’t open a short trade only because price reached R2 level. You want some additional signal or confirmation.

3. Failed R2

R2 level can be a strong resistance but there are times that price manages to go higher. Sometimes it may lead to stronger continuation of the trend. Your strategy should incorporate that.

4. R2 from other time frames

You have R2 on daily Pivot Points but you also have R2 from 4-hour Pivot Points, weekly Pivot Points, monthly Pivot Points and so on. Thanks to that you have more trade opportunities.

5. Divergence and R2

Price can stay for some time near R2 level. It may lead to divergence between price and oscillators. I recommened to check divergence ased on RSI or MACD. It’s not 100% accurate signal but it’s a valuable information that reverse move might be in progress.

6. R2 and other levels based on price action

It’s always a good idea to combine R2 with classic price chart analysis. You search for supply, demand zones based on higher time frames, important resistance levels, price action from higher time frames such as shooting stars etc.

If you see that based on higher time frame something is going on near R2 level then it might be important information that there might be a good entry opportunity.