Navigation

Pivot Points

Pivot points are a fundamental term used in technical analysis. A pivot point represents the point at which the overall trend in price changes.

All of asset trading revolves around capitalizing on price trends as closely as possible to the beginning of the trend, in order to take full advantage of price movements in either direction either by selling a declining asset or buying an ascending asset so as to maximize profits and minimize losses. Since pivot points occur, by definition, at the start of a new price trend, the science of discovering pivot points is vital to effective technical analysis and effective trading in general. Many of the charts and tools used in technical analysis focus on discovering these pivot points. Trendline breaks, wedge and triangle patterns, and even more esoteric calculations and indicators (such as the Camarilla Equation or Keltner Channels) can be thought of as tools to discover effective, accurate pivot points in the price trend of an asset market.

Pivot points can be calculated for any time frame (Montly, Weekly, Daily, etc), although the most common time frame is for Daily charts.

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

Resistance 1 (R1) = (2 x Pivot Point)

Back to Forexpedia Main Page

"Nothing is particularly hard if you divide it into small jobs."
Henry Ford
Clicky Web Analytics