Pivot Points
Pivot points are a type of technical analysis used by traders to identify potential support and resistance levels in the market. They are calculated using the previous day’s high, low, and close prices. By plotting these points on a chart, traders can identify areas where the price may reverse or continue its current trend. Pivot points are also used to identify potential entry and exit points for trades.
History of Pivot Points
Pivot points were first developed by floor traders in the financial markets. They used the data from the previous day’s trading to calculate potential support and resistance levels for the current day. This allowed them to identify potential entry and exit points for their trades. Over time, the use of pivot points has become more widespread, and they are now used by traders in a variety of markets, including stocks, commodities, and currencies.
Comparison Table
| Pivot Point | Support Level 1 | Support Level 2 | Resistance Level 1 | Resistance Level 2 |
|---|---|---|---|---|
| High | Pivot – Low | Pivot – (High – Low) | Pivot + (High – Low) | Pivot + High |
| Low | Pivot – High | Pivot – (High – Low) | Pivot + (High – Low) | Pivot + Low |
Summary
Pivot points are a type of technical analysis used by traders to identify potential support and resistance levels in the market. They are calculated using the previous day’s high, low, and close prices. By plotting these points on a chart, traders can identify areas where the price may reverse or continue its current trend. Pivot points are also used to identify potential entry and exit points for trades. For more information on pivot points, traders can visit websites such as Investopedia, TradingView, and StockCharts.
See Also
- Support and Resistance
- Moving Averages
- Relative Strength Index (RSI)
- Bollinger Bands
- Fibonacci Retracements
- Stochastic Oscillator
- MACD
- Average Directional Index (ADX)
- On Balance Volume (OBV)
- Price Action
