Hi Paul,
To be perfectly honest, I do not know what the reasoning is...Because I am just starting to learn about pivots and the like thanks to Garry's excellent journal, I am following much of his reasoning while I observe and test this type of method, as well as try to see if pivot points could form the basis of a useable trading strategy (for me at the least).
I agree with you that there is, intuitively, more sense behind floor pivots and in my testing, I intend to observe both FTP and CAM (e.g. the multiplicative factor of 1.1/4 etc... in the CAM calc seems arbitrary). I would also note that I have read some sketchy things about CAMs in older threads on both this site and elite trader but also good thing.
At the present time, I am thinking of pivots, be they CAM, FTP, DeMark or whatever else, as areas where the trader expects/believes that price will react in a certain direction. Now, if price reacts at this level in the anticipated fashion, I would postulate that this level was indeed significant for market participants. The question that remains is whether or not the pivot point calc stumbled upon this level by accident or that the equation is indeed a reliable predictor of important S/R terms in and of itself. Based on a limited amount of observation at this point, I have seen price respect these S/R levels almost to the tick on some occasions and blow right through them as if they didn't matter on others. While Garry has recorded success in this journal by merely playing the price levels as calculated, I suspect at this point that the use of additional filters to help confirm the move at the identified level should increase the risk-reward ratio of the trades. For example, if a higher time frame is in a downtrend, as established through other means, I would argue that maybe the trader wouldn't want to play a long off the reversal long line just because the price was hit. Perhaps, the move would be to allow price to figure out what it wants to do. If it bounces off the support, great...allow it to come back up to a level where you are prepared to go short and take that trade; if price shoots through it, then perhaps allow price to come back up to the RL line from underneath and see if there is some momentum behind it to justify a cautious long or, on a fail of that level, an additional shorting opportunity.
Then again, perhaps all a load of rubbish...your thoughts and impressions are appreciated
Regards,
Ivor