what are pivot points on a forex chart and what do they represent?
Hi Jennifer,
The Pivot Point System is a technique developed by floor traders, to help ascertain where the price is relative to previous market action. It can be classified as a technical indicator derived by calculating the numerical average of the high, low and closing prices, of any currency / index / stock etc.
The first way is for determining overall market trend: if the pivot point price is broken in an upward movement, then the market is bullish, and vice versa.
The second method is to use pivot point price levels to enter and exit the markets. For example, a trader might put in a limit order to go long, if the price breaks a resistance level, and use a lower support level as a stop.
The strength of support and resistance of these levels is usually determined by the number of times price has reacted at these levels. The more times the price has reached a support or resistance level, and then reversed from there, the more powerful is that level.
These also give ideal technical levels to place protective stops, which can be placed just outside a support or resistance level.
I have taken this from http://www.aboutcurrency.com/strategies/forextradingstrategies/forex_strategy_trading_with_pivots.shtml and i hope you will get all information here.
See you
Forex Pivot Point Calculator and forex trading
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