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# How to calculate forex pivot points investopedia?

Forex pivot points are a popular technical analysis tool used by forex traders to identify potential support and resistance levels for a given currency pair. Pivot points are calculated using the high, low, and close prices of the previous trading day. They are commonly used by day traders and swing traders to make informed trading decisions.

In this article, we will explain how to calculate forex pivot points using the investopedia method. This method is one of the most widely used and accepted ways of calculating pivot points in the forex market.

### Step 1: Determine the Pivot Point

The first step in calculating forex pivot points is to determine the pivot point. The pivot point is the level at which the sentiment of the market changes from bearish to bullish or vice versa. To calculate the pivot point, you need the high, low, and close prices of the previous trading day.

### Pivot Point (PP) = (High + Low + Close) / 3

For example, if the high, low, and close prices of the previous day were 1.1500, 1.1400, and 1.1450, respectively, the pivot point would be:

### Step 2: Calculate the Support and Resistance Levels

Once you have calculated the pivot point, you can use it to calculate the support and resistance levels. These levels are potential areas where the price may reverse or continue to move in the same direction.

### Step 3: Interpret the Results

Once you have calculated the pivot point, support, and resistance levels, you can use them to make informed trading decisions. If the price is trading above the pivot point, it is considered bullish, and traders may look for buying opportunities. On the other hand, if the price is trading below the pivot point, it is considered bearish, and traders may look for selling opportunities.

The support and resistance levels can also be used to identify potential entry and exit points. If the price approaches a support level, traders may look for buying opportunities, while if the price approaches a resistance level, traders may look for selling opportunities.

### Conclusion

Forex pivot points are a powerful tool that can help traders identify potential support and resistance levels for a given currency pair. By calculating the pivot point, support, and resistance levels using the investopedia method, traders can make informed trading decisions and improve their chances of success in the forex market. However, it is important to remember that pivot points are just one tool in a trader’s toolbox and should be used in conjunction with other technical and fundamental analysis tools.