Part I. Pivot points – description and calculation. Commander in Pips: Pivot points are extremely useful tool, especially because they are leading indicators. As you know we have only a few really leading indicators – Fib extensions and retracements, some indicators such as Oscillator Predictor and Pivot points. Since they are so few, we should not ignore any of them. They give us a huge advantage, because we know them ahead of time. Another important quality of Pivots is that they are objective – they absolutely do not depend on the person who draws them. So, you and Mr. W. Buffett see the same pivot points. This is because pivot points are calculated based on prices of previous trading periods. Later you will now how it could be done. Pivot points look very similar to Fibonacci retracement levels, but have absolutely different calculation algorithm. Pipruit: And why are they so important? Commander in Pips: For many reasons: 1. Almost all traders look at them, as with Fibonacci, Pivots are almost a self-fulfilling prophecy. But it happens not only due that reason, but also because the pivot formula has some statistical qualities, that’s why they work. 2. Pivot points could show you where support or resistance could appear in advance. Especially, if they are weekly or monthly pivot points. In this case you know this levels for whole future week or month; 3. Price action around pivot point allows you to judge about market sentiment. 4. Pivot points touches by the market in 70-80% of cases. Other words, it is 70% probability that market will touch the weekly pivot during the week or monthly pivot during the month.