Stocks & Commodities V. 31:3 (10-15): Camarilla Points by Slawomir Bobrowski
Camarilla Points by Slawomir Bobrowski
Trading In Multiple Time Frames
Here’s how you can use camarilla points to trade in
multiple time frames.
Pivot points are a common trading tool, especially among
floor traders. Camarilla points are similar to pivot points,
but there are some differences. The concept is based on
the assumption that markets fluctuate about a point of balance
(referred to as a pivot). Eight basic points (levels of prices) are
calculated by camarilla formulas for a time frame of interest.
The inputs are the previous trading session’s high, low, and
close for the time frame you choose.
Camarilla points are best suited for range trading, but are ill
suited for trading runaway breakouts. I will provide examples
of such situations later on. The backtesting of trading strategies
based on the application of camarilla points shows that
the time of exposure to risk created by market uncertainties
In this article I will show you how to apply the camarilla points to your trading on various time frames. “S” stands for
“support” and “R” stands for “resistance”:
Levels S1, S2, S3, and S4 are considered basic support
Levels R1, R2, R3, and R4 are considered basic resistance
Levels S5 and R5 are added to handle breakouts
Levels S3, S4, R3, and R4 are considered the most
important in a trading plan.
Most price congestion is going to happen in these support
and resistance areas. The levels important in trading breakouts
are R4 in conjunction with R5, and S4 in conjunction with S5.
However, breakouts more often than not are better handled
when using Elliott wave analysis (wave count).
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