Categories
3. Pivot Points

How to Calculate Pivot Points

The first thing you’re going to learn is how to calculate pivot point levels.

The pivot point and associated support and resistance levels are calculated by using the last trading session’s open, high, low, and close.Since forex is a 24-hour market, most forex traders use the New York closing time of 5:00pm EST as the previous day’s close.

Pivot Point Calculation

The calculation for a pivot point is shown below:

Pivot point (PP) = (High + Low + Close) / 3

Support and resistance levels are then calculated off the pivot point like so:

First level support and resistance:

First resistance (R1) = (2 x PP) – Low

First support (S1) = (2 x PP) – High

Second level of support and resistance:

Second resistance (R2) = PP + (High – Low)

Second support (S2) = PP – (High – Low)

Third level of support and resistance:

Third resistance (R3) = High + 2(PP – Low)

Third support (S3) = Low – 2(High – PP)

Keep in mind that some forex charting software plot intermediate levels or mid-point levels.These are basically mini levels between the main pivot point and support and resistance levels.

Forex pivot points and intermediate levels

If you hated algebra, have no fear because you don’t have to perform these calculations yourself.Most charting software will automatically do this for you. Just make sure you configure your settings so that it uses the correct closing time and price.

We here at BabyPips.com also have our very own Pivot Point Calculator!

The forex pivot point calculator can come in handy, especially if you want to do a little backtesting to see how pivot point levels have held up in the past.

Remember, one of the advantages of using pivot points is that it is objective, so it’s very easy to test how price reacted to them.

Next up, we’ll teach you the various ways in which you can incorporate pivot points into your forex trading strategy.

4 replies on “How to Calculate Pivot Points”

My spouse and i have been very more than happy Albert could do his basic research through the ideas he had in your web page. It is now and again perplexing to just happen to be offering techniques a number of people might have been making money from. So we fully understand we need you to appreciate for that. The type of explanations you have made, the straightforward blog menu, the friendships your site make it easier to promote – it’s many incredible, and it’s leading our son in addition to us do think this matter is excellent, and that is really vital. Many thanks for all the pieces!

The next time I read a blog, I hope that it doesnt disappoint me as much as this one. I mean, I do know it was my choice to read, but I actually thought youd have something attention-grabbing to say. All I hear is a bunch of whining about one thing that you could repair in the event you werent too busy searching for attention.

Leave a Reply

Your email address will not be published. Required fields are marked *