Forex trading is a complex and dynamic field that requires traders to understand various concepts and strategies to be successful. One such concept that traders must master is the intermediate pivot. An intermediate pivot is a crucial level that traders use to determine the direction of a market trend. In this article, we will explore what an intermediate pivot is, how it works, and how traders can use it to their advantage.
What is an Intermediate Pivot?
An intermediate pivot is a support or resistance level that represents a significant turning point in the direction of a market trend. Intermediate pivots are more significant than minor pivots but less significant than major pivots. They are usually used by traders to identify trend reversals and potential entry and exit points.
Intermediate pivots form when the price of an asset reaches a level where buyers or sellers begin to take control, causing a reversal in the trend. These levels are often marked by the price bouncing off them or breaking through them. Intermediate pivots can be identified on any time frame, from hourly to monthly charts, and are often used in conjunction with other technical analysis tools, such as moving averages and trend lines.
How Does an Intermediate Pivot Work?
Intermediate pivots work by providing traders with a level at which the price of an asset is likely to reverse. When the price reaches an intermediate pivot level, traders can use this information to determine whether to enter or exit a trade. If the price bounces off an intermediate pivot level, it is likely to continue in the same direction as the trend. However, if the price breaks through an intermediate pivot level, it is likely to indicate a trend reversal.
Traders can also use intermediate pivots to set stop-loss orders and take-profit levels. If a trader enters a long position and the price reaches an intermediate pivot level, they may set a stop-loss order just below this level to limit potential losses. Similarly, if a trader enters a short position and the price reaches an intermediate pivot level, they may set a take-profit level just above this level to lock in profits.
How to Use an Intermediate Pivot in Forex Trading?
Traders can use intermediate pivots in various ways to improve their forex trading strategies. Here are some ways to use intermediate pivots in forex trading:
1. Identify Trend Reversals: Traders can use intermediate pivots to identify potential trend reversals. When the price breaks through an intermediate pivot level, it is likely to indicate a trend reversal. Traders can use this information to enter or exit a trade, depending on the direction of the trend.
2. Set Stop-Loss Orders: Traders can use intermediate pivots to set stop-loss orders to limit potential losses. If a trader enters a long position and the price reaches an intermediate pivot level, they may set a stop-loss order just below this level to limit potential losses. Similarly, if a trader enters a short position and the price reaches an intermediate pivot level, they may set a stop-loss order just above this level to limit potential losses.
3. Set Take-Profit Levels: Traders can use intermediate pivots to set take-profit levels to lock in profits. If a trader enters a short position and the price reaches an intermediate pivot level, they may set a take-profit level just below this level to lock in profits. Similarly, if a trader enters a long position and the price reaches an intermediate pivot level, they may set a take-profit level just above this level to lock in profits.
Conclusion
Intermediate pivots are a crucial tool for forex traders looking to improve their trading strategies. They provide traders with a level at which the price is likely to reverse, allowing them to identify potential trend reversals, set stop-loss orders, and take-profit levels. Intermediate pivots should be used in conjunction with other technical analysis tools to improve their accuracy. With proper use, intermediate pivots can help traders make more informed trading decisions and improve their overall profitability.
