Barky's EMA Boxes

Using pivots to navigate price structure

We have previously looked at pivots and how they discover the levels that later become support or resistance. More specifically, I wrote that levels are key, but not all of them matter in equal terms. Many levels are just ‘internal’ - they don’t make new lows or new highs. The levels where price makes a significant new low or new high, those are the ‘pivots’ that we have to have our eyes on.

Let’s have a brief look at some of the details of pivots.

In the chart below, you see an M5 EMA9 downtrend, and price has just confirmed a low to backtest the EMA9, looking for rejection to confirm a lower high. The ‘outside candle’ confirms the pivot.

Price rejects, confirming that M5 EMA9 is attempting to lead. The immediate new low confirms the lower high.

This is where it gets interesting, because we do have two pivots, but no clean trend structure to define higher lows and lower highs. On M5, we only see a lower high and a bearish engulfing candle, while the process isolated the wick as a pivot by definition.

The process matters, not what happens after. The process has given us two pivots. Now we can anchor horizontal lines from these pivots to highlight their levels.

The magic happens after you draw the lines, then zoom in to a lower timeframe. Below is that M5 bounce and rejection on M1. Zooming in reveals trend structure and confirms why these pivots matter.