If you read my blog for some time you know that I like to check yearly Pivot Points. And now we have very interesting situation on EUR/USD.
Notice that EUR/USD tried to break through the yearly R3 in late 2020. Without success.
It also failed in early 2021, and then started a strong move down.
It looks like it may stop at the yearly Pivot line for 2021, at least for a while:
Will there be a bigger bounce from here? We’ll see.
How can such information be used? In this particular case:
- those with a profitable short positions on EUR/USD can realize part/all of their profits or move a trailing stop loss closer
- those looking for a rebound on EUR/USD may try to look for long opportunities
Since we’re talking about yearly Pivot Poitns, let’s have a quick look at stock market.
SPX, 2020 – resistance at yearly R1 level was a though one. Eventually, SPX broke higher and this year we see a continuation of the upward trend.
Both DAX and SPX are quite close to the R1 levels for 2021. Below DAX, weekly timeframe:
Of course, this does not mean that they will reach these levels in a straight line. A correction may occur on the way. Nevertheless, if the indices approach these levels, it will be important information for us that some resistance is possible here.
As a reminder, some information regarding yearly Pivot Points.
Yearly Pivot Points levels are important because they are based on the entire previous year. This does not mean, however, that the price must always react specifically at each level.
As these levels are based on a long period of time (the whole year) it may happen that the price reacts close to this level and not exactly at specifit price point. That’s normal.
It’s best to analyze yearly pivots on weekly and monthly timeframes. In that case, we observe weekly and monthly candles and it’s easier to analyze with which levels they react with.