Forex trading is all about buying and selling currencies with the aim of making a profit. However, the value of currencies is subject to change due to various factors, such as economic indicators, geopolitical events, and market sentiment. As a result, traders need to be aware of the repairing price in forex, which is an important concept that can help them make informed trading decisions.
Repairing price, also known as pivot point or support and resistance level, refers to the price level at which a currency pair is expected to reverse its direction. This price level is determined based on the previous day’s high, low, and closing prices. The repairing price is calculated by adding the high, low, and closing prices of the previous day and dividing the sum by three.
For example, if the previous day’s high, low, and closing prices of a currency pair are 1.2000, 1.1900, and 1.1950, respectively, the repairing price would be:
(1.2000 + 1.1900 + 1.1950) / 3 = 1.1950
The repairing price is considered the primary support or resistance level, depending on the direction of the market trend. If the market is bullish, the repairing price acts as a support level, while if the market is bearish, the repairing price acts as a resistance level.
Traders use repairing price as a tool to identify potential entry and exit points for their trades. If the market is approaching the repairing price from below, traders may consider buying the currency pair, as there is a higher chance of an upward reversal. On the other hand, if the market is approaching the repairing price from above, traders may consider selling the currency pair, as there is a higher chance of a downward reversal.
In addition to the primary repairing price, there are also secondary support and resistance levels, which are calculated based on the primary repairing price and the previous day’s trading range. These levels are known as S1, S2, R1, and R2, and they represent additional levels of support and resistance that can help traders identify potential entry and exit points.
S1 is calculated by multiplying the primary repairing price by 2 and subtracting the previous day’s high. R1 is calculated by multiplying the primary repairing price by 2 and subtracting the previous day’s low. S2 is calculated by subtracting the previous day’s high from the primary repairing price and then subtracting the difference from the primary repairing price. R2 is calculated by adding the previous day’s low to the difference between the primary repairing price and the previous day’s high.
Traders also use other technical indicators, such as moving averages, trend lines, and Fibonacci retracements, to confirm the repairing price levels and make their trading decisions. By combining these indicators with the repairing price, traders can develop a comprehensive trading strategy that takes into account various market factors and trends.
In conclusion, repairing price is an essential tool for forex traders, as it helps them identify potential entry and exit points for their trades. By calculating the repairing price based on the previous day’s high, low, and closing prices, traders can determine the primary support or resistance level and use it to make informed trading decisions. Traders can also use secondary support and resistance levels, as well as other technical indicators, to confirm the repairing price levels and develop a comprehensive trading strategy.
