Understanding Forex Pivot Points

forex-pivotpoint.jpgDaily20pip system working and dealing with daily pivot point. So what is pivot point? Pivot Points are those price levels that are most likely to act as levels of support and resistance on any given trading day. When the price moves through the pivot point on increased volume it is most likely to continue current trend, and if the price hits the known pivot point but is unable to move through it is most likely to reverse the current trend.

 

The most widely used formula for calculating pivot points is as follows, Pivot Point = (H + L + C)/3 when H = previous day’s high, L = previous day’s low, and C = previous day’s close

 

When the trending/declining price is not able to move through the known pivot point after two or more tries there is a good probability that it will start to decline/falling. It will become Swing trading method which a trader is waiting for a price to reverse after hitting S/R level is called swing trading.

 

On the other hand if the trending/declining price has easily moved through known Support/Resistance level there is a good probability that it will continue to trending/decline. Trading method in which a trader is looking for a price to continue to move in the same direction after moving through Support/Resistance level is called breakout trading. For the same reason, the most influential pivot points are those that are used by majority of traders.

 

 

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