Forex Daily Pivots: How to Calculate Monday?
Forex daily pivots are an essential tool for forex traders as they help identify potential support and resistance levels for any given trading day. These levels are calculated based on the previous day’s high, low and close prices. The pivot point is the level at which the market direction may change for the day. It is also used to determine potential price targets for the day.
Calculating Monday’s pivot point is no different from calculating any other day’s pivot point. However, it is important to note that the calculation is based on the previous day’s price action, which is Friday’s price action in this case.
The pivot point is calculated as follows:
Pivot Point (PP) = (High + Low + Close) / 3
Where:
High = The highest price of the previous day
Low = The lowest price of the previous day
Close = The closing price of the previous day
Once the pivot point is calculated, traders can use it to determine potential support and resistance levels for the day. The first level of support and resistance are calculated as follows:
First Support (S1) = (2 x PP) – High
First Resistance (R1) = (2 x PP) – Low
The second level of support and resistance are calculated as follows:
Second Support (S2) = PP – (High – Low)
Second Resistance (R2) = PP + (High – Low)
The third level of support and resistance are calculated as follows:
Third Support (S3) = Low – 2 x (High – PP)
Third Resistance (R3) = High + 2 x (PP – Low)
Using Monday’s price action to calculate Tuesday’s pivot point is also possible. Traders can simply use Monday’s high, low and close prices to calculate the pivot point and subsequent support and resistance levels.
The pivot point and support and resistance levels are important tools for traders as they help identify potential entry and exit points for trades. Traders can use these levels to determine where to place stop-loss orders and take-profit orders. For example, a trader may place a stop-loss order just below the first level of support and a take-profit order just below the first level of resistance.
In conclusion, Forex daily pivots are an essential tool for forex traders as they help identify potential support and resistance levels for any given trading day. Calculating Monday’s pivot point is no different from calculating any other day’s pivot point. The pivot point is calculated based on the previous day’s high, low and close prices. Traders can use these levels to determine potential entry and exit points for trades.
