Pivot Points are sub-set of Support and Resistance. This special form of projected Support and Resistance from base trading methodology used be the local traders on the floor of the exchange.
Pivot Points are calculated Price Levels that the floor traders, and those who read the tape, like to watch during the trading session.
In order to calculate these levels can be used the formula below :
(edit by : http://tradingthingys.com/PitPivotPoints.pdf)
Here you can find also a list of interesting sites where to find the usual things about these levels:

Well if we suppose that Close = High and change this in the pivot formulas you get that
DP = Low + 66% DR
While if Close = ½ High = 50% last swing we get
DP = Low + 18%DR
Therefore we can say that DP is a level moving in a range which depends on the close of the previous day whose boundaries are 34% to 80% from High if Close doesn’t go below the middle of the swing (Bullish bar).
Do these numbers remember you something ? …. You are right : Fibonacci levels!

If Yesterday DAY bar was a long bullish bar we should expect to have DP close to 38% fibo and if today will be another bullish bar this could be a good support. But if the Yesterday DAY bar was spin (range daily) the power of fibo & pivot is lower and we could expect some DP breakout.
Pivot Points are calculated Price Levels that the floor traders, and those who read the tape, like to watch during the trading session.
In order to calculate these levels can be used the formula below :
- Central Pivot Point (DP) = (High + Low + Close) / 3
- First Resistance (DR1) = (2*P) - Low
- First Support (DS1) = (2*P) - High
- Second Resistance (DR2) = P + (R1-S1)
- Second Support (DS2) = P - (R1- S1)
In general, if the day's Price Action starts above the "Pivot", it will
tend to stay above the Pivot (also called the "fulcrum" of the day's
activity). Resistance will be met at Price Level R1. Should R1 be broken, further Resistance will be expected at R2. The story is all reversed, of course, if the price action is below the Pivot. Support will be met at Price Level S1. Should S1 be broken, further Support will be expected at S2.
If, after starting the day above the Pivot, the Price crosses back through the Pivot, the Pivot will act as a Resistance area. Pivot Points and Levels are Support and Resistance levels, and behave exactly like any historical Support and Resistance level.
If, after starting the day above the Pivot, the Price crosses back through the Pivot, the Pivot will act as a Resistance area. Pivot Points and Levels are Support and Resistance levels, and behave exactly like any historical Support and Resistance level.
(edit by : http://tradingthingys.com/PitPivotPoints.pdf)
Here you can find also a list of interesting sites where to find the usual things about these levels:
- http://www.investopedia.com/articles/forex/05/fxpivots.asp
- http://www.babypips.com/school/how-to-calculate-pivot-points.html
- http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators:pivot_points
Well if we suppose that Close = High and change this in the pivot formulas you get that
DP = Low + 66% DR
While if Close = ½ High = 50% last swing we get
DP = Low + 18%DR
Therefore we can say that DP is a level moving in a range which depends on the close of the previous day whose boundaries are 34% to 80% from High if Close doesn’t go below the middle of the swing (Bullish bar).
Do these numbers remember you something ? …. You are right : Fibonacci levels!
If Yesterday DAY bar was a long bullish bar we should expect to have DP close to 38% fibo and if today will be another bullish bar this could be a good support. But if the Yesterday DAY bar was spin (range daily) the power of fibo & pivot is lower and we could expect some DP breakout.
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