Trading with Pivot Points :- Professional traders use pivot points to identify potential support and resistance levels. Simply putting , a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change,
why pivot points are so enticing?
With pivot points, traders typically use the same method for calculating them.
As you can see here, horizontal support and resistance levels are placed on your chart. And look – they’re marked out nicely for you! How convenient is that?! How to Calculate Pivot Points?
The first thing you’re going to learn is how to calculate pivot point levels.
The pivot point and associated support and resistance levels are calculated by using the last trading session’s open, high, low, and close. Since TRADE is as the previous day’s close.
The calculation for a pivot point is shown below:
Pivot point (PP) = (High + Low + Close) / 3
Support and resistance levels are then calculated off the pivot point like so:
First level support and resistance:
First resistance (R1) = (2 x PP) – Low
First support (S1) = (2 x PP) – High