Pivot points trading
Hi there!
Today we are going to study a very know trading idea that has used for decades and still used successfully till now, the Pivot points trading.
What are the pivot points?
Pivot points calculation:
The main point in the pivot points and upon it all the other points will be calculated is the daily pivot or the pivot point (PP):
PP = (High + Low + Close) / 3
Where High is the highest price of yesterday, Low is the lowest price of yesterday and Close is the close price of yesterday.
The first support line (S1) is calculated with this formula:
S1 = (2*PP) - High
And the second support line (S2) is calculated with this formula:
S2 = PP - (High - Low)
To calculate the first resistance line (R1) use this formula:
R1 = (2*PP) - Low
And the second resistance line (R2) is calculated with this formula:
R2 = PP + (High - Low)
Note: The above pivot point formula ( PP= (H+L+C)/3 ) is the traditional one, however there are some other formulas for calculating pivot point:
PP = (High + Low + Close + Open of today) / 4
PP = (High + Low + Open of today) / 3
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