Central Pivot Range Indicator: Calculation, Interpretation, Pros and Cons and Conclusion
Central Pivot Range is a common tool used by traders for analyzing stocks. CPR lines serve as excellent indicators of trend direction and strength. If the current market price breaks convincingly above the TC line, it confirms a bullish trend.
Look at the chart as you can see that the daily CPR is one above the other every day. When a stock is in uptrend, we should always look for buying opportunities only. You can manually calculate the CPR of any security or stock by using the above formula. You can also use our CPR calculator to calculate the CPR along with other important floor and camarilla pivot points.
- It is very popular among traders due to its versatility and simplicity.
- Central Pivot Range (CPR) indicator is used to identify key points of price levels and trade accordingly.
- For a long time, pivot points have been an effective trading indicator; however, one type of pivot point currently popular among traders is the central pivot range or CPR indicator.
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CPR can be calculated as daily, weekly, or monthly depending on your trading style. These levels help traders identify where prices might face resistance or find support. When the stock has a bullish outlook, that is, when the market price of the stock remains higher than the TC level in CPR, a trader can enter the market. In this case, the trader must look for buying opportunities, and the TC level serves as a support line. CPR indicators can be used to identify the bullish or the bearish trend in the market or for the stock. The analysis or the interpretation based on the CPR indicator is quite simple.
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- If you are familiar with Zerodha’s trading terminal, Kite, you probably know that you can choose to analyze stock/index charts either on Tradingview or on ChartIQ.
- The Pivot Point is the center point, and the Upper Pivot Range and Lower Pivot Range are the potential resistance and support levels, respectively.
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- A narrow CPR width is when the distance between the TC and BC is relatively small.
The Central Pivot Range (CPR) is a technical tool predicting potential support and resistance levels. It’s calculated from the previous day’s high, low, and close prices, offering a central pivot point with two accompanying levels, guiding traders in making informed entry and exit decisions. To comprehend the CPR indicator, two fundamental concepts must be grasped.
I always refer to the highest level as TC, and the lowest level as BC, regardless of which formula led to the level’s creation. Whereas in traditional pivot points these TC and BC pivots don’t exist, it only comprises the Central Pivot and other floor pivots like R1,R2,R3 and S1,S2,S3 etc. When the CPR makes higher highs every day, i.e., the CPR is one above the other, that indicates that the particular stock or security is in an uptrend.
What is the Central Pivot Range Indicator
While it can be a helpful tool, it is essential to note its limitations. First, it is primarily a derived indicator based on historical price data and does not consider other fundamental or market-specific factors. Additionally, like any technical analysis tool, it could be better and should be used with other indicators. For both cases, the support and resistance levels provide an idea regarding which are the levels beyond which a breakout is central pivot range formula possible, either upside or downside. Accordingly, it is also possible to calculate the extent of profit or loss from the entry point. CPR is a leading indicator that means it remains the same through out the day like other floor and camarilla pivots.
Upward Trend in Central Pivot Range Strategy
Yes, CPR is often combined with other technical indicators for stronger confirmation signals. If the price breaks above the TC line, it might indicate a bullish trend. Conversely, a break below the BC line could signify a bearish trend. For professional-grade stock and crypto charts, we recommend TradingView – one of the most trusted platforms among traders. If you are a beginner, you should avoid trading in sideways stocks as there is high probability of stop-loss hunting in these stocks. Central Pivot Range (CPR) is a well-known intraday indicator used by technical analysts daily.
In a sideways market where the price is oscillatingbetween support and resistance, the CPR plays a crucial role. Traders can initiate buying positions when the price tests the BC support line and look to sell near the TC resistance line. The Pivot Point is the center point, and the Upper Pivot Range and Lower Pivot Range are the potential resistance and support levels, respectively. Traders can use these levels to identify possible entry and exit points and set stop-loss and take-profit levels. In conclusion, the Central Pivotal Range (CPR) Indicator is more than just a tool; it’s a comprehensive strategy for those wishing to delve into the technical nuances of trading. When understood and used correctly, it can open doors to enhanced trading opportunities and insights.
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Trading Strategies using Central Pivot Range (CPR)
A narrow CPR width is when the distance between the TC and BC is relatively small. When the distance between TC and BC is quite huge, it is a wide CPR width and indicates a sideways market. A medium CPR width is when the distance between TC and BC is between the narrow and wide margins of CPR. By integrating CPR into your trading strategy and accurately interpreting it, you can get valuable insights into the price movements of a stock.
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Furthermore, CPR is often used with other technical indicators and analysis methods to help traders make informed trading decisions. Hence, central pivot range indicators are commonly available in popular trading platforms. If the current market price is below the bottom central level, it indicates a downtrend, which is the best time for traders to place their sell orders. Therefore, traders use CPR to determine potential market support and resistance levels.
The virgin CPR acts as a strong support and resistance, so what we will do is, we will try to take entry near the virgin CPR and put our stop loss just below the virgin CPR. Once you have picked the stocks now log in to your kite dashboard and plot the CPR indicator with floor pivots. A seller’s market exists when the current price is lower than the Bottom Central Pivot Point (BC). Similarly, the trader must pursue selling opportunities when the current market price falls below the BC. A CPR breakout is when the stock price is pushed beyond the TC level or The BC level of the CPR lines along with high volumes. When the current price is lower than the Bottom Central Pivot Point (BC), it indicates a seller’s market.