Pivot Point

AAA

DEFINITION of 'Pivot Point'

A technical analysis indicator used to determine the overall trend of the market over different time frames. The pivot point itself is simply the average of the high, low and closing prices from the previous trading day. On the subsequent day, trading above the pivot point is thought to indicate ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment.

INVESTOPEDIA EXPLAINS 'Pivot Point'

A pivot point analysis is often used in conjunction with calculating support and resistance levels, similar to a trend line analysis. In a pivot point analysis, the first support and resistance levels are calculated by using the width of the trading range between the pivot point and either the high or low prices of the previous day. The second support and resistance levels are calculated using the full width between the high and low prices of the previous day.

VIDEO

Loading the player...
RELATED TERMS
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Structural Pivot

    A price-bar formation that gives real-time price signals of support ...
  4. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  5. Congestion

    1. A market situation whereby the demand of contract holders ...
  6. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
RELATED FAQS
  1. What are the alert zones in a Fibonacci retracement?

    The most commonly used Fibonacci retracement alert levels are at 38.2% and 61.8%. A 50% retracement level is also commonly ... Read Full Answer >>
  2. How should a risk-averse investor build a retirement portfolio?

    One trading strategy to use when a stock's price fails to reach a higher high would be to short the stock while setting a ... Read Full Answer >>
  3. What are the most common market indicators forex traders follow?

    There are literally hundreds of technical indicators for forex traders to choose from, however, there are a few which may ... Read Full Answer >>
  4. How do I use STARC Bands for creating a forex trading strategy?

    STARC bands are similar to Bollinger Bands in terms of forming a channel that expands or contracts in relation to price movement ... Read Full Answer >>
  5. What are the best technical indicators that complement the Polarized Fractal Efficiency ...

    Pivot points and major moving averages representing support and resistance levels are good technical indicators to incorporate ... Read Full Answer >>
  6. How do I use the Dynamic Momentum Index for creating a forex trading strategy?

    A forex trading strategy using the dynamic momentum index can be designed to trade off of daily pivot points or other major ... Read Full Answer >>
  7. Why are forex Pivot Points important for traders and analysts?

    A pivot point is used to reflect a change in market sentiment. Technical analysts and traders use pivot points to determine ... Read Full Answer >>
  8. What is a common strategy traders implement when using the Dynamic Momentum Index?

    Traders use the dynamic momentum index to determine trade entries in relation to daily pivot points. The dynamic momentum ... Read Full Answer >>
  9. 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 Full Answer >>
Related Articles
  1. Active Trading

    Gauging The Strength Of A Market Move

    Learn how to apply the ACD technique to a longer time horizon.
  2. Technical Indicators

    Using Pivot Points For Predictions

    Learn one of the most common methods of finding support and resistance levels.
  3. Forex Education

    Using Pivot Points In Forex Trading

    Learn to combine this powerful tool with traditional technical tools for greater returns.
  4. Forex Education

    Pivot Strategies: A Handy Tool For Forex Traders

    Make more educated trading decisions by identifying major turning points.
  5. Active Trading

    Tales From The Trenches: The Rising Wedge Breakdown

    Learn how to short this reversal pattern with a favorable risk/reward ratio.
  6. Active Trading

    Candle Sheds More Light Than The MACD

    Read the case against this well-established indicator.
  7. Active Trading

    Sell Growth Stocks The IBD Way

    Savvy investing is all about learning some smart rules and sticking to them. We give you the rundown.
  8. Active Trading Fundamentals

    Find A Trend With The Partial Retrace

    Learn how to spot the pivot point from which a new movement will emerge.
  9. Investing

    Is There Still Opportunity in Japanese Stocks?

    Japanese stocks’ strong performance has prompted market watchers to question whether there’s still a case for adding exposure to the Land of the Rising Sun
  10. Fundamental Analysis

    20-Year Treasury Bond ETF Trading Strategies

    iShares 20-Year Treasury Bond ETF offers a highly liquid equity alternative to direct bond exposure.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!