entially, a Pivot Point is the average of the High, Low and Closing prices from a previous trading session.
Pivot Points act as a leading/predictive indicator in that on the subsequent day, trading that goes above the Pivot Point is considered a bullish signal, while trading that goes below it is considered a bearish signal.
In Pivot Trading, the general trend is that if the market opens above or below the pivot, the price action has a strong tendency to remain above/below the pivot for that trading session.
Keeping this in mind, as it allows you to avoid much of the market noise that may show up later in the day.
On the other hand, if the market opens or trades at extreme support or resistance levels, it has a general tendency to trade back to the pivot.
Traders should remember this to avoid buying high or selling low even as the price moves away from the pivot.
The Opening, High, and Closing Prices are used to calculate Pivot Points based on the chart’s timeframe.
Pivot Points act as a leading/predictive indicator in that on the subsequent day, trading that goes above the Pivot Point is considered a bullish signal, while trading that goes below it is considered a bearish signal.
In Pivot Trading, the general trend is that if the market opens above or below the pivot, the price action has a strong tendency to remain above/below the pivot for that trading session.
Keeping this in mind, as it allows you to avoid much of the market noise that may show up later in the day.
On the other hand, if the market opens or trades at extreme support or resistance levels, it has a general tendency to trade back to the pivot.
Traders should remember this to avoid buying high or selling low even as the price moves away from the pivot.
The Opening, High, and Closing Prices are used to calculate Pivot Points based on the chart’s timeframe.