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How to find the entry point in forex using pivot points?

The forex market is a lucrative arena for traders who want to make profits in a short period. However, trading in the forex market requires a lot of technical analysis, and traders need to be familiar with various trading strategies. One of the most popular techniques used by forex traders is the pivot point trading strategy. Pivot points are used to determine the entry and exit points in the forex market. In this article, we will explain how to find the entry point in forex using pivot points.

What are Pivot Points?

Pivot points are a popular technical analysis tool used in the forex market. They are used to determine the overall trend of the market and to identify the key levels of support and resistance. Pivot points are calculated by taking the average of the high, low, and closing prices of the previous trading day. The pivot point formula is:

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

Once the pivot point is calculated, traders can identify the support and resistance levels by calculating the following:

– R1 (Resistance 1) = (2 x P) – Low

– R2 (Resistance 2) = P + (High – Low)

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

– S1 (Support 1) = (2 x P) – High

– S2 (Support 2) = P – (High – Low)

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

How to Find the Entry Point Using Pivot Points?

Finding the entry point in forex using pivot points requires a trader to understand the market trend and the key support and resistance levels. Here are the steps to follow:

Step 1: Identify the Market Trend

The first step in finding the entry point using pivot points is to identify the market trend. Pivot points are useful in determining the overall trend of the market. If the price is trading above the pivot point, it is considered bullish, and if the price is trading below the pivot point, it is considered bearish. Traders can use the pivot point levels to determine the market trend and to identify the key support and resistance levels.

Step 2: Identify the Key Support and Resistance Levels

The next step is to identify the key support and resistance levels. Traders can use the R1, R2, R3, S1, S2, and S3 levels to determine the key support and resistance levels. If the price breaks above the resistance level, it is considered bullish, and if the price breaks below the support level, it is considered bearish. Traders can use these levels to enter the market when the price breaks above the resistance level or below the support level.

Step 3: Determine the Entry Point

Once the key support and resistance levels have been identified, traders can determine the entry point. Traders can enter the market when the price breaks above the resistance level or below the support level. This is known as a breakout trade. Traders can also enter the market when the price bounces off the support or resistance level. This is known as a reversal trade.

Step 4: Set Stop Loss and Take Profit Levels

Once the entry point has been determined, traders need to set their stop loss and take profit levels. Stop loss is used to limit the losses in case the trade goes against the trader, and take profit is used to exit the trade when the price reaches a predetermined level of profit. Traders can set their stop loss and take profit levels based on the key support and resistance levels identified using the pivot points.

Conclusion

Pivot points are a popular technical analysis tool used in the forex market. They are used to determine the overall trend of the market and to identify the key levels of support and resistance. Traders can use pivot points to find the entry point in forex by identifying the market trend, the key support and resistance levels, and setting their stop loss and take profit levels. Pivot points can help traders to make informed trading decisions and to maximize their profits in the forex market.

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