Chart Patterns

Pivot Levels

Pivot points are used to determine critical resistance and support levels. In the forex market, they can be used to identify points for range-trading, and entry for trend trading. Pivot points are also useful for identifying levels that need to be broken to qualify as a breakout.

The pivot point is formulated by adding the high, low and close price of the previous day divided by three:

P = H + C+ L /3

The support and resistance levels are then formulated from the pivot point we obtained above:

For the First Resistance (R1) / Support(S1) level:

(R1) = (2*P) - Low
(S1) = (2*P) - High

For the Second Resistance (R2) / Support(S2) level:

(R2) = P + (R1-S1)
(S2) = P - (R1- S1)

Reliable pivot point indicators are available for most charting software to necessitate trading and therefore lessen the hassle of manual formulation.