Pivot points

Again and again one hears in the trading area of so-called pivot points, but what is this and how can you use them to act?

In General, one can say that pivot points or lines are used to predict where resistance and support levels are in the course of the day.

For this, the previous range is made to help, so previous day high, low of the previous day and previous day closing price. If you added these 3 values together and divides the result by 3, you get the pivot point around which of course should move on the current day.

This expected then two lines that you want to sketch out resistance and support. The calculation of these lines is as follows:

Support 1 (s1) = (pivot point * 2) - previous day high

Resistance 1 (R1) = (pivot point * 2) previous day low

Support 2 (s2) pivot-point-= (R1 - S1)
Resistance 2 (R2) = pivot-point + (R1 - S1)

The respective pivot points support and resistance lines, you can also simply on LiteForex in the details view of currency pairs in the section "Technical" out spelling, if you use the MetaTrader, can also templates download, to integrate them automatically in his chart.

The problem and to the vulnerability of the points in the field of Forex is that there is no official beginning and no official end for the market. Some traders take the New York Exchange hours with this but the London and Frankfurt Stock Exchange session is excluded for example as a basis for the calculation of the points.

Officially the Forex market opens however briefly closed and immediately Central European time 11: 00 p.m. for interest may be credited. This means that you should use the time of 23: 01 to 23: 00 (CET) for the calculation of the points.

The big advantage of the points is that generally used, so that a bouncing movement or break of support and resistance lines should be strengthened by further dissemination.

My tip to do this, is simply drawing the lines themselves - can draw automatically by template in the MetaTrader, have one so no work - and to simply look at the price movement when the lines. You will be amazed how often actually a resistance or support on the previously defined lines developed.

An important note at the end... of course it is also possible to drawing points for shorter time whether as much sense behind is, I dare however to doubt.