DEFINITION of 'Forex Pivot Points'

A set of indicators developed by floor traders in the commodities markets to determine potential turning points, also known as "pivots". Forex pivot points are calculated to determine levels in which the sentiment of the market could change from "bullish" to "bearish." Currency traders see pivot points as markers of support and resistance.

Forex pivot points are calculated as the average of the high, low and close from the previous trading session:

Forex Pivot Point = (High + Low + Close) / 3


BREAKING DOWN 'Forex Pivot Points'

Because pivot points are thought to work well in very liquid markets, the spot forex market may be the perfect place to use them. Day traders use the calculated pivot points to determine levels of entry, stops and profit taking by trying to determine where the majority of other traders may be doing the same. Forex pivot point calculators are available free of charge across the internet through retail forex brokers and third-party websites.

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RELATED FAQS
  1. How do I calculate forex pivot points?

    Pivot points were originally developed by floor traders in the equity and commodity exchanges. They are calculated based ... Read Answer >>
  2. Why are forex Pivot Points important for traders and analysts?

    See why pivot point analysis is particularly applicable to the forex market and what traders consider when they use pivot ... Read Answer >>
  3. What are the best technical indicators to complement a forex Pivot Point strategy?

    Learn the best technical indicators used by traders and analysts to complement a forex trading strategy based on daily pivot ... Read Answer >>
  4. What are the differences between a Pivot and a Pivot Point?

    Understand the basics of pivot trading and the key difference between the calculation of the pivot and the pivot points derived ... Read Answer >>
  5. What is the difference between forex Pivot Points and forex Levels of Support & resistance?

    Understand the differences between pivot points and levels of support/resistance in an asset's price movements, both in and ... Read Answer >>
  6. How are Pivots interpreted by analysts and traders?

    Find out why traders and analysts use pivots in their analysis of price movements and why pivots can be used to create trading ... Read Answer >>
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