Although often discussed, or you often find a technique using the Pivot Point Trading, no one if we rewrite trading techniques using this system. Pivot point is a technique developed by stockbrokers on the trading floor, which can help us see where the location of a price level relative to the situation and market dynamics that happen before.
In accordance with the sense of the word, the pivot point means a point or extent to which a price movement will reverse direction. In forex, pivot point is the level where the market sentiment changed from 'bullish' (rose) to be 'bearish' (down), or vice versa. Pivot point is like a support or resistance, the price is moving closer to this point will be met with resistance and will reverse direction. But if the price broke through and move past this point, the movement will continue until it reaches the point berikutnya.bPivot pivot point and resistance levels as well as his support was calculated using the opening prices, the highest, lowest, and closing of the trading session before. Because the forex market is active continuously for 24 hours, traders use the benchmark New York market close (21:00 GMT) as a benchmark time of closing of currency exchange.
Pivot points are calculated by the following formula:
Pivot Point = (High + Low + Close) / 3
While support and resistance levels are calculated as follows:
The first support (S1) = (2 * PP) - High
The first resistance (R1) = (2 * PP) - Low
The second support (S2) = PP - (High - Low)
The second resistance (R2) = PP + High - Low)
