Categories
Popular Questions

How to find pivot points in forex?

Forex trading is all about predicting the future movements of currency pairs. This is done by analyzing various technical indicators and market trends. One such tool used by traders is the Pivot Point. Pivot Points are calculated based on the previous day’s high, low, and closing price. They are used to identify potential resistance and support levels for the day. In this article, we will discuss how to find pivot points in forex.

What are Pivot Points?

Pivot Points are a popular tool in forex trading that helps traders identify potential support and resistance levels. These levels are calculated based on the previous day’s high, low, and closing price. Pivot Points are typically used by day traders to determine entry and exit points for their trades.

600x600

How to Calculate Pivot Points?

There are different methods for calculating Pivot Points. The most commonly used method is the Standard Pivot Point, which uses the following formula:

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

Resistance 1 (R1) = (2 x PP) – Low

Resistance 2 (R2) = PP + (High – Low)

Resistance 3 (R3) = High + 2 x (PP – Low)

Support 1 (S1) = (2 x PP) – High

Support 2 (S2) = PP – (High – Low)

Support 3 (S3) = Low – 2 x (High – PP)

To calculate Pivot Points, traders need to have access to the previous day’s high, low, and closing price. Once these values are obtained, the Pivot Point and its associated support and resistance levels can be calculated using the above formula.

How to Use Pivot Points in Forex Trading?

Pivot Points can be used in different ways in forex trading. Some of the popular methods are:

1. Pivot Point Breakout Strategy

In this strategy, traders wait for the price to break above or below the Pivot Point level. If the price breaks above the Pivot Point, it is considered a bullish signal, and traders will look to buy. Conversely, if the price breaks below the Pivot Point, it is considered a bearish signal, and traders will look to sell.

2. Pivot Point Reversal Strategy

In this strategy, traders look for a reversal in price at the Pivot Point level. If the price is trending down and reaches the Pivot Point level, traders will look for a bullish reversal signal to buy. Conversely, if the price is trending up and reaches the Pivot Point level, traders will look for a bearish reversal signal to sell.

3. Pivot Point Support and Resistance Strategy

In this strategy, traders use Pivot Points as potential support and resistance levels. If the price is trending up and reaches a Pivot Point resistance level, traders may look to sell or take profit. Conversely, if the price is trending down and reaches a Pivot Point support level, traders may look to buy or take profit.

Conclusion

Pivot Points are a useful tool in forex trading to identify potential support and resistance levels. These levels can be used to determine entry and exit points for trades. Traders can calculate Pivot Points using the previous day’s high, low, and closing price. Pivot Points can be used in different trading strategies, such as Pivot Point breakout, Pivot Point reversal, and Pivot Point support and resistance. As with any trading tool, it is essential to test and validate Pivot Points using historical data before using them in live trading.

970x250

Leave a Reply

Your email address will not be published. Required fields are marked *