Pivot points: what are they?

It happens every single time (unfortunately). We start reading about Forex stuff and we come across some new terms which we instantly forget about when charts go crazy. It is a common scenario for most of us, but it is not a good one.

Incorporating new terms and concepts to your Forex mental encyclopedia sets you up for success. It does not guarantee it, but it gets you closer to it. And that is 100% proven.

So, let’s begin with a term that most of us have heard in the past but not many took the time to learn about it consciously of its positive effects in day-to-day trading.

Definition: “A pivot point is a technical analysis indicator used to determine the overall trend of the market over different time frames.”

Again, we are talking about trend. Therefore, trading above the pivot point is seen as supportive for a bullish move, while trading below the pivot point could be interpreted a dovish signal.

Have you seen a similar table in the past?

S3 S2 S1 PP R R2 R3
1.2234 1.2240 1.2243 1.2249 1.2252 1.2258 1.2261

In case you are not following...

  • S1 / S2 / S3: First, second and third level support.
  • R1 / R2 / R3: First, second and third level resistance.
  • PP: Pivot Point

Behind-the-scenes calculations:

  • PP = (High + Low + Close) / 3
  • R1 = (2 x PP) – Low
  • S1 = (2 x PP) – High
  • R2 = PP + (High – Low)
  • S2 = PP – (High – Low)
  • R3 = High + 2(PP – Low)
  • S3 = Low – 2(High – PP)

Source link   Presented by Fort Financial Services

Is gold the best safe-haven asset?

From the thousand articles you read this week about the market, gold has been mentioned over and over again as a safe-haven asset. And yes, despite...

Bitcoin: a real investment?

The fact that you made a couple of bucks buying and selling Bitcoin doesn't make it a true investment. At least not for Warren Buffett, one of the world...

Habits that reduce your Forex risks

There are plenty of blogs out there. Some good, some not. And there are thousands of publications talking about risk management. While many...

A word on treasury yields

The yield of the benchmark 10-year Treasury note reached 3 percent in the previous session, a level not seen since January 2014. Gary Pollack, head of fixed-income...

Trading synthetic currency pairs

A synthetic cross currency pair refers to an artificial combination of currencies usually not available in the market. If you are taking your first steps in the Forex market...

Easy ways to avoid scammers in Forex

The Forex market is not a scam. In fact, it is an amazing place to make money. Unfortunately, dirty scammers (which operate not only in the Forex market...

Start paying attention to position size

When it comes to risk management, everything counts. And defining the right size for your position plays a key role in the equation. Intuitively...

Trading journal: should you keep one?

There are so many Forex blogs out there. Sometimes I think too many actually. But some of them are pretty useful (like ours, of course) and a common...

How to 'trade the news' in forex?

I am sure you've heard of it. The term 'trade the news' refers to those guys who would rather read newspapers all day instead of sitting...


Share it on:   or