Pivot Point

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What is a 'Pivot Point'

A pivot point is 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.

BREAKING DOWN '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.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. Why are forex Pivot Points important for traders and analysts?

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  5. How are Pivots interpreted by analysts and traders?

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  6. 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 >>
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