Using Pivot Points in the Forex Market
Have you heard of Pivot Points trading strategy? Here, we will discuss using pivot points in the forex market.
In general, pivot points can be seen as the main support or resistance level. The following figure is a 1 hour chart of the GBP / USD currency pair with pivot levels calculated using the daily high, low and close prices.
Open Price. There are three major open market times in the FX market, the US open time, which takes place around 7 pm, the European open time, which occurs at about 1 pm, and the Asian open time which occurs at 6 am.
Often we see when trading using pivot points in the FX market is a range of trading or price moves between pivot levels with the level of support and or first resistance. Many traders also play in this range.
If the price plays between the pivot levels (serves as support) with the first resistance then there is a potential breakout signal when the pivot level is broken (breakout). The price moves lower and is now between the pivot level (serves as resistance) and the first support level.
One important point that can be understood when trading using pivot points in the forex market is the penetrating motion that tends to appear in one of the open market time. The reason is the entry of traders to the market at the same time.
During a quieter period of time, between the closing of the US market (at 3 or 4 AM GMT) and the opening of Asia (at 6:00 am, and sometimes even throughout the Asian session, which is the quietest trading session), the price may move narrowly until hours between pivot levels and support or resistance levels. This becomes ‘land’ looking for profit for traders ranging.
Trading using pivot points strategy in the forex market is not difficult. A predetermined formula, getting critical levels (unchanged) and easy trading (ranging or breakout). All you have to do is adjust to the trend of price movements and fundamental trends.
Happy using Pivot Level …