If you are new to trading or technical analysis, you may have come across the term CPR and wondered what it actually means. CPR, or Central Pivot Range, is a widely used technical indicator that helps traders identify important support and resistance zones for a trading session.
Unlike indicators that rely on complex calculations or lagging data, CPR in trading is simple, forward-looking, and highly practical, especially for intraday traders. This guide explains what is CPR in trading, how it is calculated, and how traders interpret it to understand market direction and sentiment.
What Is CPR in Trading?
The Central Pivot Range (CPR) is a technical analysis tool derived from the previous day’s price action. It uses the high, low, and closing prices to project key levels where price may:
- Face resistance
- Find support
- Consolidate before a breakout
CPR is primarily used in intraday trading, but many traders also apply it to short-term positional setups.
Components of CPR
The CPR indicator consists of three horizontal levels:
- Pivot Point (P) – the central reference level
- Top Central Pivot (TC) – the upper boundary
- Bottom Central Pivot (BC) – the lower boundary
Together, these three lines form the Central Pivot Range.
CPR Formula: How to Calculate Central Pivot Range
The CPR formula is based entirely on the previous trading day’s data.
Step-by-Step CPR Calculation
- Pivot Point (P)
(High+Low+Close)÷3(High + Low + Close) ÷ 3(High+Low+Close)÷3 - Bottom Central Pivot (BC)
(High+Low)÷2(High + Low) ÷ 2(High+Low)÷2 - Top Central Pivot (TC)
(Pivot−BC)+Pivot(Pivot − BC) + Pivot(Pivot−BC)+Pivot
Once these levels are plotted, traders use them as reference zones for the next trading session.
Why CPR Is Popular Among Traders
CPR is widely used because it:
- Works well in range-bound and trending markets
- Helps define market bias early in the day
- Acts as a decision framework rather than a signal generator
- Combines well with volume, VWAP, and price action
Rather than predicting price, CPR helps traders react better to price movement.
How to Interpret CPR in Trading
Understanding CPR interpretation is key to building a CPR trading strategy. Here are the most common scenarios traders watch for.
1. Virgin CPR
A Virgin CPR occurs when price does not touch or cross any CPR level during a trading session.
- Indicates strong untested support or resistance
- Often respected in the next session
- Statistically, price may hesitate or reverse near this zone
Virgin CPR zones are closely watched for rejection or breakout moves.
2. Price Trading Above the Top Central Pivot (TC)
When price sustains above the top central pivot:
- Market bias is bullish
- CPR acts as a support zone
- Pullbacks toward TC or Pivot may attract buyers
This scenario often supports buy-on-dips strategies.
3. Price Trading Below the Bottom Central Pivot (BC)
When price remains below the bottom central pivot:
- Market bias turns bearish
- CPR behaves as resistance
- Rallies toward BC or Pivot may face selling pressure
This setup is typically used for sell-on-rise strategies.
4. Price Trading Within the CPR Range
When price moves inside the CPR band:
- Market is in consolidation or accumulation
- Directional clarity is low
- Traders wait for a breakout with volume
A narrow CPR often signals a strong breakout, while a wide CPR suggests sideways movement.
CPR Trading Strategy: Practical Use
A basic CPR trading strategy focuses on:
- Identifying market bias early
- Trading in the direction of price relative to CPR
- Avoiding trades inside a wide CPR range
Many traders combine CPR with:
- VWAP
- Volume analysis
- Candlestick patterns
- Trend indicators
CPR works best as a context-setting tool, not a standalone signal.
CPR Indications and Contraindications
Understanding CPR indications and contraindications helps traders avoid common mistakes.
CPR Indications
- Trend direction when price holds above or below CPR
- Potential breakout when CPR is narrow
- Support and resistance zones with higher reliability
CPR Contraindications
- Weak signals during low-volume sessions
- False breakouts without confirmation
- Reduced effectiveness during major news or event-driven volatility
Using CPR blindly without confirmation can lead to poor trade quality.
Conclusion
CPR in trading is a simple yet powerful technical tool that helps traders understand market structure, trend bias, and key price zones using the previous day’s data.
By learning what is CPR in trading, applying the correct CPR formula, and combining it with price action and volume, traders can improve decision-making and risk management. Whether you are a beginner or an experienced trader, CPR provides clarity in fast-moving markets when used correctly.
FAQs on What is CPR in trading?
CPR (Central Pivot Range) is a technical indicator used to identify support and resistance levels based on the previous day’s high, low, and close
Yes. CPR is most commonly used for intraday trading, but it can also support short-term positional analysis.
A narrow CPR often signals high volatility and a potential breakout during the trading session.
CPR works best when combined with volume, VWAP, or price action. It is not ideal as a standalone indicator
Low-volume markets, major news events, and lack of confirmation can reduce CPR reliability.
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