Pivot Points in Forex: Mapping Your Time Frame

It is useful to have a map that makes you able to see the position of the price relative to the previous market movement. In this way, we can see what traders and investors are feeling at any given moment, as well as give us a general idea of ​​the direction the market will take during the day. 1K Daily Profit Opinioni information can help us decide how to trade.

Pivot Points are a technology developed by traders in traditional trade rooms to help them see the price position compared to previous market movements.

By definition, the pivot point is a potential turning point. The same can be applied to the Forex market where the pivot point is the level at which the market sentiment or preferences may change from “bullish” to “bearish” and vice versa. If the market breaks above this level it can be said that sentiment or preferences or market trends are bullish and likely to continue to rise, on the other hand, if the market breaks below this level, this may indicate a change in the trend down and is likely to continue falling market . Also at this level, the market is expected to find some support or resistance, and if the price can not break the pivot point, recovery from that area is likely.

Pivot Points work well in heavily liquid markets such as the spot Forex market, but can also be used in other markets.

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Pivot Points

In a few words, the pivot point or focus is the level at which the sentiment of investors and traders changes from bullish to bearish and vice versa.

Why are Pivot Points useful?

Pivot points are useful as many individual traders and investors use and trust them and the same happens with banks and institutional traders. Is known to every trader who knows that the pivot point is an important measure of the strength or weakness of any market.

Calculate pepot points

There are many ways to calculate pipot points. The way they are found to be the best in terms of the accuracy of their results is calculated by taking the average of the top, bottom and closing of the previous period (or previous session). Peppot Point

(PP) = (top + bottom + closure) / 3

For example, take the following information on or relating to EURUSD from the previous trading session:
Opening: 1.2386
Top: 1.2474
Bottom: 1.2376
Closure: 1.2458

The pivot point will be as follows,

PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this figure tell us?

In a simple way, this figure tells us that if the market moves to the top of 1.2439, this means that the buyers will win the battle and thus their ability to push the price higher. If the market moves below 1.2439, this means that the sellers are the ones who won the battle and therefore will have the ability to continue pushing the price down. In both cases, this situation is likely to continue until the next trading session.

As the Forex market operates 24 hours a day (there is no closing or opening from day to day), there is an eternal battle over which time will be based on the opening and closing levels of the top and bottom of each trading session. In our view, the times that give the most accurate predictions come from taking the opening price at 00:00 GMT and closing at 23:59 GMT.

Beside the base point calculation, there are also support and resistance levels calculated by taking the pivot point as a reference in this order. Support
1 (S1) = (PP * 2) – H Resistance
1 (R1) = (PP * 2) – L Support
2 (S2) = PP – (R1 – S1) resistance
2 (R2) = PP + (R1-S1)

Where H is the peak of the previous period and L is the bottom of the previous period

To continue with the example above we will find
PP = 1.2439
S1 = (1.2439 * 2) – 1.2474 = 1.2404
R1 = (1.2439 * 2) – 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 – 1.2537) = 1.2537
S2 = 1.2439 – (1.2636 – 1.2537) = 1.2537

These levels are supposed to highlight support and resistance levels for the current session. In the example above, the pivot point was calculated using the previous period (the previous day) in 1K Daily Profit Opinioni way we can see potential support and resistance levels. But can also be calculated using the previous week or month data to determine such levels. By doing so we will be able to determine market trends over a long period of time. Also we can see potential levels that can provide support or resistance during the week or month. Calculating the pivot point on a weekly or monthly basis is usually used by traders in the long term, but it can also be used by short term traders, giving them a good idea of ​​the long term trend.

S1, S2, R1 and R2 …? Substantive alternative

As mentioned earlier, the Peabot Point Area is a well-known technique that works well because many traders and investors use and trust it. But what about other support and resistance zones (S1, S2, R1 and R2) that can be used to predict support and resistance levels through a mathematical equation that is somewhat personal. It will be difficult to rely entirely on this method simply because this equation gives us potential levels. That is why we have developed an alternative way to map a time frame, which is more simple but more objective and effective. We calculate the pivot point as mentioned above. But levels of support and resistance are drawn differently. We take the top and bottom of the previous session and then draw these levels on the chart today. This is repeated before the previous trading session. Thus we will have a fulcrum with four important levels drawn on the chart we are using.
LOPS1, the bottom of the previous session.
HOPS1, the top of the previous session.
LOPS2, the session low before the previous session.
HOPS2, the top of the session before the previous session
PP, point of reference.

These levels will tell us about the strength of the market at any given moment. If the market is trading at the highest point it can be considered in the context of a possible bullish trend. If trading above HOPS1 or HOPS2, this means that the market is already in a bullish direction and we can then think only of taking positions. If the market is trading below the pivot point it can be considered in the context of a possible bearish trend. If it is trading without LOPS1 or LOPS2, this means that we are actually bearish and we can only consider taking positions.

The idea behind this method is quite simple. We know that for some reason the market stopped at that area from going up or down during the previous session or the session that precedes it. We may not know why we may not need to know. We just know the truth: the market has reversed at this level. We also know that traders and investors remember this in the sense that they remember that the price has stopped here before and therefore there is a possibility that the market will re-emerge from that point again (perhaps because of this reason or maybe not) or at least find support or resistance in that region. What is most important in this approach is that the levels of support and resistance are measured objectively; they are not just levels drawn according to a mathematical formula, but their importance stems from the price reflection at those levels before and therefore the chances of renewed effectiveness are certain. Our way of charting is to operate in all market conditions whether they are in a certain direction or moving in a sideways position. As the market moves in a direction, ArbiCash will help us determine the strength of this trend and trading from important levels. While in the sideways markets we will see possible reversal levels.

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