Use the pivot points differently to trade forex or stocks
Pivot points or pivot levels were used to be so popular among the retail Forex and stock traders, but they are getting forgotten maybe because the popular trading platforms like MT4 don’t support the pivot points, or, day trading is losing its fans because most traders have learned that it is too hard to make money consistently through day trading.
Pivot points have been used to be used by the banks stock traders. Dow jones futures market watch They still use it. Dollar to pound exchange rate graph Before the New York market opens, the banks stock traders have already plotted the pivot points on their charts and are waiting for the markets to open to take proper actions when the price reaches the main pivot point and the related support and resistance levels.
Pivot points or pivot levels are indeed some special levels (horizontal lines) that are calculated and plotted on the price charts based on the previous time period prices.
Usd zar rate There are three different prices that are used in pivot points calculation:
When you want to calculate the pivot points on the daily chart, you have to use the previous day’s high, low and close prices. Therefore, each time frame has its own pivot points which is different from the other time frames. Binary to decimal calculator However, I am going to share a different trading system here that uses a longer time frame pivot points to trade a shorter time frame.
Although I believe that you cannot trade just based on the pivot points, it is good to have them on the charts because sometimes they show the levels that the price may react, reverse or retest. Usd brl rate You will see that the price really reacts to the pivot points.
You don’t have to be a day trader to use the pivot points on the short time frames like 30 or 15 minutes. Code binary You can calculate and have the pivot points on the longer time frames like weekly and monthly and then use a shorter time frame like daily to follow the price reactions.
If you hover your mouse pointer on each candlestick on MT4, it shows the candlestick’s 4 prices on the bottom right side of the platform. Euro to usd exchange rate For example, if you hover your mouse pointer on USD/CHF 2017.01.08 weekly candlestick, the open, high, low and close prices will be 1.01716, 1.02469, 1.00418 and 1.00791 respectively:
Now you can switch to the daily chart and see how the daily candlesticks that opened the next week (which is the week that was started after the 2017.01.08 weekly candlestick closed), reacted to the 1.01226 pivot level.
As you can see on the below chart, the 2017.01.16 daily candlestick went up to retest the 1.01226 pivot level, but the level worked as a strong resistance, and so the 2017.01.16 daily candlestick closed with a long upper shadow. Decimal word problems 6th grade That could be known as a signal indicating that the next day candlestick would be bearish. Binary to ascii That was a true signal because the 2017.01.17 went down for over 120 pips and closed with a strong bearish body.
Later on, the 2017.01.19 candlestick also tried to retest the 1.01226 pivot level, but went down and closed with a too long upper shadow which was the second signal indicating that the 2017.01.20 candlestick would most probably be bearish which is exactly what the 2017.01.20 candlestick did.
The main pivot point which is the average of the high, low and close prices is the most important pivot level and usually works as a strong support or resistance. Ntd to usd You can clearly see the market’s reaction to this level on the above chart. Usd to jpy exchange rate However, there are some other pivot levels as well that although the price doesn’t react to them the way that it reacts to the main pivot level, they can be important for the price movement sometimes.
As you can see on the below chart, the market was bearish and although the 2017.01.16 daily candlestick tried to go up, but it was stopped by the 1.01226 level, and so it never went up to reach the Resistance 1 at 1.02034. Usd to cad exchange rate history However, the Support 1 at 0.99983 is exactly where the 2017.01.17 daily candlestick is stopped, which means this level really worked as a support. Eur to usd exchange rate So, adding the Resistance 1 and Support 1 could also help in taking the right decision to follow the next daily candlesticks and make some money:
There are some more support and resistance levels in this context (Resistance 2 and Support 2) that I am not going to talk about them in this article, because here I am following a different approach compared to what the pivot traders usually do. Numbers in binary In this article, I tried to prove that the pivot points are important and the markets really react to them. Usd to inr chart I showed an accurate and live example which is related to the most recent weekly and daily candlestick on USD/CHF price chart. Usd to php exchange rate today You can do your homework and try the above method on some other time frames and currency pairs and see how it works. Oil futures market history You can also read these articlee to learn more:
Keep in mind that pivot points don’t work every day and sometimes the price moves as if there is no pivot level at all. Eur usd bloomberg Therefore, you shouldn’t take any positions when the price reaches one of the pivot levels. Dow futures market hours You should wait for the price to react to the level and form a signal first, and then you make your decision accordingly. Stock market cnn futures Trading is not usually as easy as most traders think.