Lesson #53 Steps to Calculate the Pivot Points

Forex is a 24-hour market; therefore most traders use the New York closing time of 4:00pm EST as the previous day’s close. Based on the last trading sessions open, high, low, and close the pivot point and associated support and resistance levels can be computed.

The formula for a pivot point calculation is revealed below:

Pivot point (PP) = (High + Low + Close) / 3

Given the pivot point the support and resistance levels can then be calculated with the following formula:

First level support and resistance:

First support (S1) = (2*PP) – High

First resistance (R1) = (2*PP) – Low

Second level of support and resistance:

Second support (S2) = PP – (High – Low)

Second resistance (R2) = PP + (High - Low)

There is no need to fret for you will not be doing these computations. This will be automatically computed by your charting software and outline it on a chart.

There is some charting software that also offers other pivot point aspects like a third support and resistance level and intermediate levels or mid-point levels, which are the levels in between the main pivot point and support and resistance level.

The minor extra levels are not as important as the major five though there is no harm to give interest to them