The Usage of Pivot Points
Student’s Question:Can you tell me how pivot points are calculated? Thanks.Instructor’s Response:In this instance, we would look at the previous day’s candle and add the high plus the low plus the close and then divide that total by three. That will provide us with the Pivot Point for the current day.The above being said, take a look at the historical chart below for how they are actually calculated on a Daily chart.
When price action is trading below the Pivot Point, the bias would be bearish. Conversely, when price is above the Pivot Point, the bias would be bullish.Something to keep in mind…many charting packages will have Pivot Points built into them and they can be placed on the charts with relative ease.
Also, here is a link to additional information on Pivot Points from Daily FX…
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