Pocket Pivot

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Definition of 'Pocket Pivot'

The Pocket Pivot is calculated using the following formula. Each of the following conditions must be true in order for a pocket pivot to exist on the current bar of a bar chart.

  • Current bar must close higher than previous bar (C0 > C1)
  • For the previous 10 bars (day -1 through day -10) the close should be lower than the close on the previous day. For example C1 < C2, C2 < C3, ... C10 < C11.
  • The volume on each of the previous 10 bars should be lower than the volume on the current bar. For example, V0 > V1, V0 > V2, ... V0 > V10.
If all of those conditions are met then a pocket pivot is signaled on the current bar.

V0 is volume on current bar.
V1 is volume on previous bar etc.
C0 is closing price on current (most recent) bar.
C1 is closing price on previous bar etc.

pocket pivot

The concept of the Pocket Pivot was discovered by Chris Kacher and Gil Morales, prior money managers for William J. O'Neil. They introduced it in their book Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market.

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