Pivot

In forex, a pivot point is a technical analysis tool used to determine potential support and resistance levels in price movements. Pivot points are calculated by taking the average of the previous day’s high, low, and closing prices.

Pivot points are used to determine the direction of price movements and identify potential support and resistance levels. These points indicate potential turning points if the price moves up or down.

Pivot points are typically used on daily, weekly, or monthly charts. Daily pivot points are used to analyze the price movement of the previous day, while weekly and monthly pivot points are used to identify longer-term trends.

Pivot points consist of five main levels:

1. Resistance levels above the market price (R1, R2, and R3)

2. Support levels below the market price (S1, S2, and S3)

R1, R2, and R3 represent potential resistance levels if the price moves upwards. S1, S2, and S3 represent potential support levels if the price moves downwards.

Traders use pivot points to determine support and resistance levels and make buying or selling decisions at these levels. For example, if the price approaches the R1 level, traders often prefer to sell, while approaching the S1 level may lead to buying decisions.

Pivot points can generate stronger signals when used in conjunction with other technical analysis tools and indicators. For instance, intersections between pivot points and moving averages or indicators like the Relative Strength Index (RSI) can be considered as buying or selling signals.

In conclusion, pivot points in forex are used as a tool to determine support and resistance levels in price movements. Traders can use these points to identify potential buying or selling points and make more informed trading decisions. However, pivot points should not be used in isolation and should be evaluated in conjunction with other analysis tools.