Script Explained

Script:                RTT PivotsY

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Purpose:            Draw the set of Pivot lines, based on previous day's Hi, Lo, Close. The seven lines provide key levels for the next day's trading range, which can help the Intraday trader pick entry and exit levels for long or short trades.
To facilitate backtesting, this script calculates and draws Pivot levels for up to 98 days in the past. For such an analysis, right-click inside the window, select the script's Properties, increase the Base Day by one day at a time, and click "OK". That will redraw the lines for each previous day, showing whether or not Intraday reversals tend to happen near the calculated levels.
Please note that plotted scripts work on any time scale. Substitute "tick" (week, hour, month...) for "day" where appropriate.

These bands are commonly used to for short-term (Intraday) swing trades.

The theory works like this: At Open, we determine (a) where the stock begins to trade and (b) in which direction it moves. Note that the first half hour ("Amateurs' Opening") tends to be deceptive; cautious traders usually wait for the dust to settle.
As soon as the price crosses the nearest level, we buy or short-sell, depending on direction. We expect that the price will reach the next level before it reverses. Once it has reversed, we wait again for the nearest level, at which point we close the position and/or enter a new trade in the opposite direction.
In the first example, the red candle on December 8 for the December SPI, the market opened just below the (central) Pivot level at 4,623. The rise above Pivot could have been the signal to buy. Price moved up 10 points to reverse at the first resistance, then dropped to 4,564, closing at the Low near 3rd Support.
The second example shows the opposite on December 13 for BHP-Billiton (London). It opens on 3rd support, moving up for a Long entry. This time, we could stay Long till it bounced off the Pivot line, giving an Intraday profit of nearly 20p.

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References:        Pivot Points defined at Investopedia
Trading Plan using Pivot Points


Parameters:       Base Day = day number, from which the Pivot set is calculated; 2 is "yesterday".
Pivot Line = the central line, average of Hi, Lo, and Close of the Base Day
Pivot is surrounded by three Support and three Resistance levels.

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Example

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