Most of the New Forex traders are always try to open their trade by Following the Indicators and most of the newbie’s use RSI , MACD , Accelerator Oscillator etc. But I think if they can find out the pivot point and use this in their trade then it will be better than those Indicators. So in below I described how to find out the Pivot Point and How to open a trade by depending on Pivot Point.
Fundamentals about Pivot Point
For Finding the Pivot Point we need to identify two major things with H1, H4, and D1 time frame.
Such as -
1.
Support
2.
Resistance
For identifying the value of Support and Resistance we need to aware about some things and those are-
1. What is the High price of Previous day
2. What is the Low price of Previous day
3. What is the Closing price of Previous day
Mathematical Calculation of Pivot Point
P.P. = Pivot Point
R1 = Resistance level One :: S2 = Support level Two
R2 = Resistance level Two :: S1 = Support level One
R3 = Resistance level Three :: S3 = Support level Three
So now the Pivot Point will be …
Pivot Point = (Previous Day High Price + Previous Day Low Price + Previous Day Closing Price) / 3
Calculation of Resistance 1 and Support 1 ( R1 & S1 ) :
R1 = (2 x P.P.) – Low price of Previous Day
S1 = (2 x P.P.) – High price of Previous Day
Calculation of Resistance 2 and Support 2 ( R2 & S2 ) :
R2 = (P.P. – S1)+ R1
S2 = P.P. – (R1– S1)
Calculation of Resistance 3 and Support 3 ( R3 & S3 ) :
R3 = (P.P. – S2) + R2
S3 = P.P. – (R2– S2)
Market Prediction based on The Pivot Point :
Now after finding the Pivot Point if we see that the market Price is above of P.P. (Pivot Point) then we can predict that the market is uptrend and if the market price is below than the P.P. then we can Predict that the market is downtrend.
Pivot Point with Bearish Movement