Lesson #52 Using Pivot Points in Forex Trading

Pivot Point is a technical indicator obtained by calculating the numerical midpoint of a particular currency price’s high, low and the closing price. As a technical indicator, the pivot price is similar to resistance or support levels wherein it can be employed as new resistance level if the following day’s market price declines below the pivot point and may act as the new support level if the market prices increase beyond the pivot point.

Pivot point technique can likewise be used as predictive indicator. Established traders and market creators will be able to pinpoint the ingress and egress points for the trading day based on the last trading day’s activity.

The use of pivot point indicator is also beneficial to:

a. short-term traders who are taking advantage of small price movements.

b. range-bound traders who will engage in a buy position near identified levels of support and a sell position when the currency pair nears resistance.

c. breakout traders who wanted to identify important levels needed to be broken down for a move to certify as a bona fide breakout.