Understanding Pivot Points in Forex Trading
Pivot Point is a tool that is widely used to determine support and resistance level points. And it’s almost similar to Fibonacci, it’s just that this tool is more objective than Fibonacci. The point here is when we use our Fibonacci that determines the swing high and swing low so that support and resistance levels will be formed while the Pivot Point already has its own formula so I and you will get the same support and resistance levels.
Now the thing to note when using a pivot point is that all traders are very strict watching the support and resistance levels of this tool so we also have to watch it too and don’t let it not 🙂
Pivot points have many benefits, especially for short-term traders who are eyeing small movements. And we can open a position ( trade ) either when the price bounces or breaks .
Range-Bound traders use a pivot point to determine a reversal . They see the pivot point as an area to determine a BUY or SELL Order.
Trader Breakout uses a pivot point to recognize the key level that can be broken which is called a real breakout.
For more details, let’s look at the pivot point on the chart of EUR / USD 1-hour price movements:
As you can see the support and resistance levels presented to you with attractive colored horizontal lines when you use the pivot point tool ( provided by the trading platform, this is the tool).
The following is an abbreviation of the abbreviations above:
PP stands for Pivot Point
R stands for Resistance
S stands for Support
How about it still confused about Pivot Points? if you are still confused please read again and practice if you are curious about Pivot Points please follow the next article.