points are one of the key tools traders use to determine where price is
likely to go and where it is likely to stall.
simply means that Forex traders take into account pivot points
calculated from the previous day's trading range and use them as
reference points to identify support and resistance levels.
Taking the high, low, close and open values of the previous day's price
action, strategic levels can be identified which may or may not have an
influence on price action. Pivot point trading puts emphasis on these
levels, and uses them to guide entry and exit points for trades.
However, as with any technical indicator, there are limitations and
pivot point trading, to be high probability, needs to stay within
points should not be used as a standalone indicator. Do not enter or
exit trades purely on the basis of pivot points. Use them in conjunction
with other indicators such as candle patterns, Fibonacci levels, MACD,
and moving averages to identify and confirm key levels of support and
resistance which may provide trading opportunities.
good to understand what is going on behind the scenes when it comes to
pivot point trading. Rather than just staring at candles on a chart,
understand what they actually represent.
Thousands of traders around the world, some working for large
institutions and handling millions or even billions of dollars worth of
currency, are taking positions according to previously established highs
and lows in the market.
points draw attention to these key levels which will often be strongly
defended by traders who have a lot at stake. This is the reason pivot
point trading can be so successful, once a trader understands underlying
reasons for price action.
The pivot points calculator will provide
support and resist levels but
also good to calculate mid levels in addition to the S1, S2, R1, and R2
pivot levels. Sometimes there is a significant gap between these levels
and calculating a mid point gives another point of reference. Price will
often be seen respecting M1, M2, M3, or M4.
calculate mid levels, simply subtract the level below from the level
above and divide by 2
Euro - US dollar pair often puts in a daily average of between 75 and
100 pips. Watch for specific behavior around the time of the London
market open. Price will often come back to test a level which is a pivot
point and form a distinctive candle pattern such as tweezers, or a
hanging man, and then reverse and go on its 75-100 pip run for the day.
price comes back to the M1 level check your other indicators to see if
they confirm this would be a good level to go long. Likewise, if price,
just around London open, tests the M4 level, check your other indicators
to see if this would be a good place to go short. You may be able to get
a slice of the 75-100 pip run for the day.