FOREX PIVOT POINTS

USING FOREX PIVOT POINTS IN FOREX TRADING AS PART OF A TRADING STRATEGY OR AS A FOREX PIVOT POINT SIGNAL HAS BEEN AROUND FOR A LONG TIME AND WAS ORIGINALLY USED BY FLOOR TRADERS. THIS WAS A NICE SIMPLE WAY FOR FLOOR TRADERS TO HAVE SOME IDEA OF WHERE THE MARKET WAS HEADING DURING THE COURSE OF THE DAY WITH ONLY A FEW SIMPLE CALCULATIONS.
THE PIVOT POINT IS THE LEVEL AT WHICH THE MARKET DIRECTION CHANGES FOR THE DAY. USING SOME SIMPLE ARITHMETIC AND THE PREVIOUS DAYS HIGH, LOW AND CLOSE, A SERIES OF POINTS ARE CALCULATED. THESE POINTS CAN BE CRITICAL SUPPORT AND RESISTANCE LEVELS. THE PIVOT LEVEL, SUPPORT AND RESISTANCE LEVELS CALCULATED FROM THAT ARE COLLECTIVELY KNOWN AS PIVOT LEVELS.
EVERY DAY THE MARKET YOU ARE FOLLOWING HAS AN OPEN, HIGH, LOW AND A CLOSE FOR THE DAY (SOME MARKETS LIKE FOREX ARE 24 HOURS BUT GENERALLY USE 5PM EST AS THE OPEN AND CLOSE). THIS INFORMATION BASICALLY CONTAINS ALL THE DATA YOU NEED TO USE PIVOT POINTS.
THE REASON TRADING WITH PIVOT POINTS ARE SO POPULAR IS THAT THEY ARE PREDICTIVE AS OPPOSED TO LAGGING. YOU USE THE INFORMATION OF THE PREVIOUS DAY TO CALCULATE POTENTIAL TURNING POINTS FOR THE TODAY.
BECAUSE SO MANY FOREX TRADERS FOLLOW PIVOT POINTS YOU WILL OFTEN FIND THAT THE MARKET REACTS AT THESE LEVELS CREATING A TRADING OPPORTUNITY.
IT IS NOT NECESSARY TO REINVENT THE WHEEL EVERYDAY AND DO MANUAL CALCULATIONS. HERE IS A LINK TO A DESKTOP CALCULATOR YOU CAN USE ON YOUR PC. BY JUST ADDING YOUR PREVIOUS DAYS HIGH LOW AND CLOSE THIS CALCULATOR WILL DO THE CALCULATION FOR YOU. THE FOLLOWING IS THE CALCULATION FOR THOSE WHO ARE INTERESTED
RESISTANCE 3 = HIGH + 2*(PIVOT - LOW) RESISTANCE 2 = PIVOT + (R1 - S1) RESISTANCE 1 = 2 * PIVOT - LOW PIVOT POINT = ( HIGH + CLOSE + LOW )/3 SUPPORT 1 = 2 * PIVOT - HIGH SUPPORT 2 = PIVOT - (R1 - S1) SUPPORT 3 = LOW - 2*(HIGH - PIVOT)
AS YOU CAN SEE FROM THE ABOVE FORMULA, JUST BY HAVING THE PREVIOUS DAYS HIGH, LOW AND CLOSE YOU EVENTUALLY FINISH UP WITH 7 POINTS, 3 RESISTANCE LEVELS, 3 SUPPORT LEVELS AND THE ACTUAL PIVOT POINT.
USE ACTIONFOREX.COM TO GET YOUR PIVOT POINT
R3
R2
BUY ONLY IF RESISTANCE IS BROKEN
R1
SELL ONLY IN RESISTANCE AREA
CPP
BUY ONLY INSUPPORT AREA
S1
IF SUPPORT IS BROKEN,SELL
S2
S3