Pivot Points are technical support and resistance levels calculated from previous price action, helping forex traders identify key price levels for entry, exits, and trend reversals. In this guide, we’ll explore how Pivot Points work, their advantages, and the best strategies to trade with them effectively.
Pivot Points are calculated price levels used to determine potential support and resistance zones for the upcoming trading session. They help traders identify market direction, key reversal areas, and breakout levels. Pivot Points are widely used by day traders and scalpers due to their reliability.
The Pivot Point formula is:
Pivot Point (PP) = (High + Low + Close) / 3
From this central Pivot Point, support and resistance levels are derived as follows:
Pivot Points act as key reversal levels:
Pivot Points help confirm breakout trades:
Pairing Pivot Points with a moving average (e.g., 50 EMA) improves accuracy:
Using Pivot Points with RSI or MACD confirms trade signals:
✅ Pros:
❌ Cons:
Pivot Points are essential tools for forex traders looking to identify key price levels, confirm trends, and optimize trade entries. When combined with moving averages or momentum indicators, Pivot Points enhance trade accuracy and decision-making.
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