The CPR Indicator or Central Pivotal Range is one of the well-known indicators used by many traders in their day-to-day trading for Intraday, Swing Trades, and even for long-term investment in stocks.
Many people think that the CPR Indicator is helpful for only intraday trading, but this is not true. I know many traders who are using CPR Indicator for both intraday and swing trading. CPR is a very powerful concept that can be very beneficial to every trader if they know how to use it correctly. This article will share everything about CPR
Indicator or Central Pivot Range, so let's start.
What Is CPR Indicator
Or Central Pivot Range?
The CPR
Indicator or Central Pivot Range is one of the most
popular and versatile leading technical indicators available to traders.
The
range acts as major support or resistance for every stock. You can even
forecast the trend of any stock, whether it will be bullish, bearish, or
sideways, by looking at the width of the CPR. Isn't it amazing?
Central Pivot Range is an average price
that is calculated using yesterday's trading session and applied to the current
trading session. CPR can be calculated as daily, weekly, or
monthly depending on your trading style.
You can
use Daily CPR if you are an intraday trader. If you trade
positionally, you can use Weekly or even Monthly CPR. CPR gives us
a range in which the market traded the most during the previous day.
This
range is where the majority of selling and buying took place. Basically, CPR is
the average price of yesterday's movement. CPR is a very
popular leading technical indicator used by many day and swing
traders.
We are
well known for Pivot points, which are powerful and basic
indicators in Technical analysis. Similarly, CPR or Central pivot range is
made up of a pivot line surrounded by support and resistance levels.
Price
action traders use different types of pivot points. One of them is the Central
Pivot Range or CPR Indicator.
Best CPR Intraday Trading
Strategy
Now
that you know what the CPR indicator is, I will share with you a simple but very
effective CPR Intraday Trading Strategy. The strategy is very
simple we will use both the concept of Narrow CPR and Virgin CPR together
to take intraday trades.
In this
strategy first, we need to find out some Virgin CPR stocks. I have
discussed what virgin CPR is later in this article. Without knowing virgin CPR
you won't be able to implement this strategy.
Once
you have picked the stocks now log in to your kite dashboard and plot the CPR
indicator with floor pivots.
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.
There
is always a high probability of reversal near the virgin CPR. So, if the price is reversed you can easily capture some points. Now the question is when to take
an entry and exit?
You
will take an entry near the virgin CPR when there are any reversal candle forms
like an inverted hammer, or morning or evening star and your target
should always be the next floor pivot.
How To Calculate The CPR
Or Central Pivot Range?
CPR is
made up of three components.
· TC = (Pivot – BC) + Pivot
· Pivot = (High + Low + Close)/3
· BC = (High + Low)/2
The CPR
formula above clearly shows that all three levels can be calculated with just
three variables: The High, Low, and Closing price of any
particular stock.
When
CPR levels are added to a stock's charts, TC is the highest level, while the
pivot is in the middle, and BC is the lowest. Depending on market conditions,
TC may have a lower value than BC.
The
highest value of the three values, regardless of how they are calculated, is
usually referred to as TC, and BC is the lowest.
This CPR
indicator's basic idea is that the trading range for a particular day
captures all market sentiment and can therefore be used to predict price
movements of the next days.
CPR levels are calculated using the previous day's
close, high, and low prices. These levels are constant throughout the day.
How To Identify Trend Of
Stocks Using CPR?
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.
Look at
the chart and you can see that the daily CPR is one above the
other every day. Thus we can consider the stock is in an uptrend. When a stock
is in an uptrend, we should always look for buying opportunities only.
So,
what about a downtrend? I think you have already guessed it. Look at the chart
below. When the CPR makes lower lows every day, i.e., one CPR
below the other, that indicates that the stock or security is in a downtrend.
When a
stock is in a downtrend, you should always look for shorting opportunities.
Always follow the overall trend because the trend will always be your friend.
When
the CPR is moving up and down, i.e., one day it is up, and the next day it is
down, that means the stock is in a sideways trend.
Look at
the chart above as you can see that the CPRs are moving ups
and downs, so we can not identify a proper trend in this stock; thus, we can
consider the stock is in a sideways trend.
If you
are a beginner, you should avoid trading in sideways stocks as there is a high
probability of stop-loss hunting in these stocks.
What Does The Width of
CPR Or Central Pivot Range Indicate?
The
width of the CPR Indicator or Central
Pivot Range plays an important role in trading.
Analyzing
the width of CPR, you can easily predict the trend of any security or stock. We
can divide the width of CPR broadly into three categories.
·
Narrow Range CPR
·
Medium Range CPR
·
Wide Range CPR
Narrow Range CPR: When the width of
the Central Pivot Range is narrow, it means that the stock was
within a small range in the previous day, week, or month, depending on the CPR you
are using.
Let's
assume that you are using a daily CPR and the stock was in a
small range the previous day, so you will notice that today's CPR will be
extremely narrow.
Thus,
we can say that whenever we see a narrow CPR, there is a good
possibility of a trending day.
Medium Range CPR: When the CPR has
a medium range, that is, the range is neither too narrow nor too wide, we can
consider the CPR as a Medium range CPR.
A
medium-range CPR indicates that the security or stock will not be as trending
as a narrow range.
Wide Range CPR: When the range of
the CPR is very wide, it means that the stock was within a big
range in the previous day, i.e. the stock was trending in the previous day,
assuming you are using daily CPR.
When
any stock was trending in the previous day, today's CPR will mostly be a wide
range CPR. Thus we can say that whenever we see a wide range of CPR,
that indicates a high possibility of a sideways day.
What Is A Virgin CPR?
A CPR
is called a Virgin CPR when all the candles on that trading
session have closed either upside or downside of the CPR, and none of the
candles closed at the CPR. A Virgin CPR acts as strong support
and resistance for the subsequent few trading sessions.
Look at
the chart above as you can see that all the candles on that particular day
closed above the CPR and no candle closed at the CPR; thus, we can consider it
as a Virgin CPR
What Is The Use Or Benefit Of A Virgin CPR?
A Virgin CPR acts as strong support or resistance. Whenever you see a virgin CPR on a stock or instrument, you first mark it for the upcoming sessions. When the price comes to that Virgin CPR level, you will probably see a strong reversal
Difference Between CPR
And Pivot Points:
The CPR
or Central Pivot Range comprises three pivots namely Top CPR (TC), Central Pivot, and Bottom CPR (BC). All these three pivots together form the range that we
call the Central Pivot Range.
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.
Both
the CPR and Pivots points are mostly the same, the only difference is the TC
and BC pivots that have been introduced by Frank Ochoa.
Some FAQs Regarding CPR
Or Central Pivot Range:
What is a CPR Indicator?
The CPR
Indicator is one of the well-known indicators used by many traders in their day-to-day trading for Intraday, Swing Trades, and even for long-term investment in
stocks.
What is Central Pivot Range?
Central
Pivot Range is an average price that is calculated using yesterday's trading
session and applied to the current trading session. CPR can be calculated as
daily, weekly, or monthly depending on your trading style.
Is central pivot range effective?
Yes, It
is very effective if you use Central Pivot Range with Floor and Camarilla
Pivots. I have been using Central Pivot Range for the last few years and I am
very happy with it.
Is CPR a good indicator?
CPR is a leading indicator which means it remains the same throughout the day like other floor and camarilla pivots. Thus it provides more value and effective results than all other lagging indicators.

Post A Comment: