CamarillaPoints

Description

The Camarilla Points study is a support-resistance technical indicator designed by Slawomir Bobrowski for range trading. This indicator is described in his article for March 2013 issue of Technical Analysis of Stocks & Commodities. Its main principle is close to that of Pivot Points, however, there are noticeable differences.

Ten levels are calculated by Camarilla Points: four define support zones, other four define resistance, and two are used for breakout handling. These levels are calculated using the High-Low range and Close price on the time frame under consideration with specific coefficient (for full description of mathematics behind this indicator, refer to the article).

When market opens within the S3-R3 (third support and resistance levels, see the table of plots) range, price rising to R3 level might be an opportunity for a short position as the market might reverse; level R4 can serve as a stop-loss in this case. If price falls down to S3, it might also be profitable to go against the current trend as there is possibility of price growth; level S4 might be used as an initial stop-loss.

When market opens outside the S3-R3 range, trading with the current trend might be a good idea after price breaks back into it: chances are it reaches the opposite pivot level. Trend reversals from S3 and R3 might happen several times during the session. Levels R2 and S2 serve as warning levels: opening a long position at R2 or short position at S2 might result in loss.

Note that the levels are calculated using data starting from the first visible bar, so study values might vary on different time periods.

Input Parameters

Parameter Description
aggregation period Defines aggregation period for Camarilla Points time frame.
length Defines duration for Camarilla Points time frame.

Plots

Plot Description
R5 The upper breakout handling level.
R4 The fourth resistance level, suggested stop-loss value.
R3 The third resistance level, possible pivot point.
R2 The second resistance level, warning signal.
R1 The first resistance level.
S1 The first support level.
S2 The second support level, warning signal.
S3 The third support level, possible pivot point.
S4 The fourth support level, suggested stop-loss value.
S5 The lower breakout handling level.

Further Reading

1. "Camarilla Points" by Slawomir Bobrowski. Technical Analysis of Stocks & Commodities, March 2013.

Example*

*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.

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