Pivot Machine Gun (PMG)

The Pivot Machine Gun is the strat pattern’s concept in which the price will make a series of higher lows or lower highs, and then on a trend reversal, the price will move through these points rapidly, breaking all these levels. It is also represented by PMG in the strat trading.

We can use the pivot machine gun in the strat patterns to increase the profit target. PMG is the concept of supply and demand. I will explain this topic in detail so you can use the PMG to benefit yourself in live trading. Make sure to read the full post without skipping any paragraphs.

How do we identify the PMG in strat patterns?

A pivot machine pattern forms when at least 5 consecutive higher lows or lower highs form in the last 5 candlesticks. You should also remember that there should not be big gaps between these successive candlesticks. I will explain it in the next heading. 

To identify the PMG for bullish trend reversal, follow the following steps:

1. First, identify the series of 5 lower highs in the previous candlesticks. 
2. Add a line to each lower high and drag it to the right. 
3. Each lower high will act as a take profit level on trend reversal. You can trace the take profit level to the last lower high line. 
4. For a bullish trend reversal after PMG formation, look for a 2D-2U bullish reversal pattern. it must match the timeframe continuity 

You should also remember that if the timeframe continuity does not match this trend reversal, you should avoid trading it. 

For the bearish trend reversal, you can identify the PMG in the following steps:

1. First, find a series of 5 higher lows in the previous candlesticks. candlesticks will be mostly bullish. 
2. Add a horizontal line to each higher low and extend it to the right. 
3. Each higher low will act as a take profit level on a trend reversal, and we will have to trace the take profit until the last higher low. 
4. for bearish trend reversal after PMG formation, look for a 2U-2D reversal pattern and then open a sell trade. You should also confirm the trade by timeframe continuity. if it’s forming against timeframe continuity, then skip that trade setup. 

What happens during the pivot machine gun pattern formation? 

The market runs on the principles of supply and demand. When there is more demand than supply, then price will increase. If there is more supply than demand, then the price will decrease. 

The same is the case for a pivot machine gun. 

When price increases in the form of consecutive higher lows, the market is consuming the demand. By consuming demand, the price is rising. However, after the demand consumption, supply will be left in the market. So, to balance it, the price will decrease. 

But when the market breaks these higher lows, many stop losses of retail traders will hit. Because retail traders always add stop-loss below the lows/highs. So, to defend the stop loss, they will open sell orders, increasing market volatility, and then the price will decrease rapidly to the origin of the pivot machine gun pattern. 

This is how PMG works in the real market. 

You should also remember that the probability of success of this pattern will increase when it forms during a major news event. 

How to trade with PMG pattern? 

The most important thing in trading is the take profit level because if a trader knows about the price target, he can hold the trade until the price reaches that target.

Similarly, the pivot machine gun pattern also forecasts the price target. This pattern also tells us that Price will easily go through these pivots.

So, if we combine the pivot machine gun with the strat actionable patterns, we can get high probability and profitable trades.

Let me show you an example.

For example, a 2-2 bullish reversal pattern forms in the S&P 15-minute timeframe, aligning with the timeframe continuity on higher timeframes. After analyzing the previous candlestick, we can see a pivot machine gun. We should open the trade on the 2-2 reversal pattern, and instead of closing at the previous high, we will trace the take profit until the price reaches the end of the pivot machine gun pattern. 

This way, we will get much higher profits than simply trading a strat actionable pattern.

The bottom line

Trading is a probability game. The higher the probability, the more winning ratio you will get.

So, by using the PMG pattern and the strat actionable patterns, we can get high probability and high-risk reward trades.

I highly recommend you backtesting the PMG pattern at least 50 times to master it.

If you have any questions about PMG or strat patterns, kindly comment below.