The Pivot Point in Forex

The pivot point, or as some call it the focal points or points of orbit and rotation points, common indicators which is used by traders in the Forex markets. Especially for daily traders, but they lose some of their relevance to the traders in the longer time frames. The main reason which gives pivot point a high popularity is that it is a quick way to find out potential support and resistance in the market.

The Potential areas to see points of support and resistance is freely based on the idea of  expected volatility in the pair, it historically had begun to "dig" futures as a quick way to search for opportunities to open and close trades during the parliamentary session. There are people who discovering a focal point on a long-term time frames, but every time you meet them, almost always be the case in the short window table. In fact, there are short-term traders do not use only pivot point.

Some platforms support pivot points, but if you use a deliberative platform do not support it, you can easily compute it and put in place. For traders of you who use the platform, "Meta-Trader 4" (MT4), there are a lot of indicators available for installation on the forums deployed in the Internet, which will calculate these points automatically, and some brokers also provide the tools you this command.

The axial levels are being computed using 3 types of information of the previous deliberative day:

•             The highest price.

•             The lowest price.

•             Closing price.

It is clear that in order to find the high and low price and the closing price of the previous day, all you have to do is to look at the candle from the previous session. A lot of traders are placing the focal point of these three prices on shorter time frames, such as time tables and schedules fifteen minutes. Pivot point can tell you when the market will decline and change direction with the other trader’s short period whose will follow it for the foreseeable future.

Focal point can be computed by using the following equation:

Pivot point= (yesterday's high + yesterday's close + yesterday’s low) / 3

Resistance point 1 = (focal point x 2) – yesterday’s low

Support point 1= (focal point x 2) - yesterday’s high

Resistance points 2 = focal point + (yesterday’s high - yesterday's low).

Support points 2= focal point - (yesterday’s high - yesterday's low).

There are potential areas of support and resistance during the short-term markets and that could be guide to the deliberative day. Often, traders will use always something like bollards in order to confirm the reactions that can occur when these areas as well.