What is a Pivot Point?

A pivot point is a group of important price levels calculated from the previous period's high, low, and close. It includes a main pivot (P) and support/resistance levels such as S1, S2, R1, R2. For beginners, just remember that price often reacts when it reaches these levels.

What is a Rejection Candle?

A rejection candle forms when price tries to break through a level but is pushed back. It has a long wick and a small body. The long wick shows that buyers or sellers failed to keep price beyond that zone.

Two Basic Rejection Candle Patterns

A bullish pin bar appears at support. It has a long lower wick and a small body near the top. Price was pushed down but bounced back, showing that sellers lost control.

A bearish pin bar appears at resistance. It has a long upper wick and a small body near the bottom. Price moved up but was quickly sold off.

How to Trade Pivot Points with Rejection

Find key pivot levels: use S1 for buying and R1 for selling. You can also use the main Pivot as a target.

Wait for a rejection candle: trade only when price touches a pivot zone and forms a pin bar.

Confirm the signal: for a bullish signal, wait for the next candle to close above the pin bar's high. For a bearish signal, wait for the next candle to close below the pin bar's low.

Place the trade: enter on the next candle after confirmation. Put your stop loss below the pin bar's low (for buys) or above the pin bar's high (for sells). Aim for the next pivot or at least a 1:2 reward-to-risk ratio.

Real Example

Suppose EUR/USD falls to the day's S1. Price touches S1 and creates a bullish pin bar. After the next candle closes above the pin bar high, you buy with a stop below the pin bar low. Price then bounces toward Pivot or R1, reaching your target. Conversely, if price rises to R1 and makes a bearish pin bar, you can sell expecting a reversal.

Common Mistakes

Entering as soon as you see a long wick without checking whether price is at a pivot level.

Ignoring the larger trend: in a strong downtrend, a bullish pin bar at S1 can still fail.

Placing the stop loss too tight, so it gets hit before the trade moves in your direction.

Not waiting for confirmation, which leads to early entries and unnecessary losses.

Content is for reference only, not investment advice. Forex trading carries high risk.

Pivot Point Trading with Candlestick Rejection Signals