Indicator pivot point is an average price of which the price is supposed to tend to the so called psychological level. The indicator can be calculated using past day or session data or candles: the tall, narrow and low, divided by 3. We give you a great way to determine which price movements may change.
Can be used for different ways to calculate, usually using the traditional method:
· Point Pivot = (H L C) / 3
• First support = (2 * Pivot) – H
• First resistance = (2 * Pivot) – L
• Second support = Pivot – (H – L)
• The second will consist of dynamic strength (H – L)
However, sometimes we have interesting gaps occurring especially in Asia on Sunday openings, and there is a way to blank filter the remaining pair, substitution of the fence yesterday, opening again today day: to reduce the chances of losing the calculation and further take into account the freshest data, in which case, the Pivot Point (PP) could be calculated as follows:
Hyesterday Lyesterday Otoday / 3 = Pivot Point
In theory, we first look at when deciding on an operation will be the pivot point and where it is, according to the current price. In general, if prices are above the Pivot Point is considered bullish, and if below, it is considered bearish.
So, if the price is below the Pivot Point in the opening, we assume if the trend is bearish and we will try to sell the pair under study, pointing to the next level down, and place our stop -loss above the side of the mouth. The price could extend the rally and overcome the first support area, indicating the probable next below. In such cases, you can use a stop-lose, to protect their recent gains.
Follow these simple tips to trade Pivot Point:
1. Calculate the Pivot Point and support / resistance levels.
2. Determine the direction of 4 hours and the daily trend.
3. Set your entry points, with the objectives of profit and loss stops.
4. Enter long positions if the trend is bullish and the price is becoming an upward direction from the pivot.
5. Enter short positions if the trend is bearish and price is becoming a downward direction Pivot
6. Remember that it is common for prices to exceed R2, and if they pass through it and R3 are probably seeing the beginning of a strong trend in development.
7. Please pairs trade more volatile engine range: this strategy does not work so well for couples who tend to move less than 100 pips per day.