What is a pivot point in forex?

[PIPruit]

Let's keep reviewing the trading concepts. What is a pivot point in forex?

 

[Fat Finger]

Pivot points are specific price levels that can help traders predict the future direction of the market. Those price levels (or pivot points) are usually calculated based on the price action from the previous day. A pivot point is simply the average of the highest, lowest, and closing price of the previous day.

The average that is calculated based on various price levels from the previous day is the main pivot point. Other key levels are derived from that main pivot point based on specific formulas. Those other levels represent support and resistance levels that the price could react to. The main pivot point is usually called P whereas the other levels derived from it are called R1, R2, and R3 for resistance, and S1, S2, and S3 for support.

The main pivot point represents the key level for establishing a bias. If the price is above it, the bias is bullish (to the upside), and if the price is below it, the bias is bearish (to the downside). If the price goes through the pivot point decisively to the downside, the bias changes from bullish to bearish, and vice versa.

Most platforms have a pivot points indicator, which displays those levels easily. You can also install a pivot point add-on to your platform for the same purpose if you do not find the indicator.

Pivot points can be used as standalone guidelines or as tools that help with other indicators. It depends on your style as a trader.

 

[edwingurero]

Great information. Pivot points help traders to use the levels so that they can plan their trading in advance and if planned in advance it’s easier to control things at a later stage.

 

[tradermini]

Useful information, thank you

 

[Deleted member 231512]

These are high on my list to learn.

 

[Troca]

If put in simple words, it is simply the average of the high, low and closing prices from the previous trading day. On the next day, if the instrument is trading above the pivot point it indicates an ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment.

Got it thanks @victoria jones

 

[perryjohn765]

A great information. Thank you for sharing.

 

[FriendlyFX]

Thank you I used to use a pivot point intraday strategy was years ago might give it a demo again

 

[V_Minh_T]

Pivot points are specific price levels that can help traders predict the future direction of the market. Those price levels (or pivot points) are usually calculated based on the price action from the previous day. A pivot point is simply the average of the highest, lowest, and closing price of the previous day.

View attachment 54529

The average that is calculated based on various price levels from the previous day is the main pivot point. Other key levels are derived from that main pivot point based on specific formulas. Those other levels represent support and resistance levels that the price could react to. The main pivot point is usually called P whereas the other levels derived from it are called R1, R2, and R3 for resistance, and S1, S2, and S3 for support.

The main pivot point represents the key level for establishing a bias. If the price is above it, the bias is bullish (to the upside), and if the price is below it, the bias is bearish (to the downside). If the price goes through the pivot point decisively to the downside, the bias changes from bullish to bearish, and vice versa.

Most platforms have a pivot points indicator, which displays those levels easily. You can also install a pivot point add-on to your platform for the same purpose if you do not find the indicator.

Pivot points can be used as standalone guidelines or as tools that help with other indicators. It depends on your style as a trader.

Very well explained, thanks. I love that pic

 

[liability]

Pivot points are used by traders to find the S/R levels (Support/Resistance Levels). So once it is determined, you can find out the possible point whether it will go bullish or bearish so that you can make a trade there