What is a 'Structural Pivot'

A structural pivot is a price-bar formation common to technical analysis. It offers a market technician a real-time price signal of support and resistance. When a series of price bars reverse direction; it is considered a structural pivot (not a calculated pivot).

The price bar has an open, high, low and close. The 'pivot' is composed of a minimum of three bars and occurs in every time frame. The pivot lows and highs are used to draw trendlines to show support, resistance and trend direction.

Example image of a structural pivot.

BREAKING DOWN 'Structural Pivot'

Think of the price pivot as an axis, which is a shaft that supports something that turns. Every pivot is a price turn and shows support (a pivot low) or resistance (a pivot high) for that time frame.

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

A structural pivot is a change in the direction of a larger magnitude. Borrowing from the field of economics, structural change is a shift or change in the basic ways a market or economy functions or operates. While prices can pivot (or reverse) for any number of reasons, most commonly cyclical in nature, a structural pivot is considered to be caused by something more significant than ordinary market noises common over short time frames.

Structural pivots shift the assumptions underlying how a market trades. These changes are often sparked by new economic developments, global shifts in the pools of capital and labor, changes in resource availability due to war or natural disaster, changes in the supply and demand for resources, and political, cultural or social movements.

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