Here are some easy-to memorize tips that will help you to make smart pivot point trading decisions:
- Pivot points are a technique used by traders to help determine potential support and resistance areas.
- There are four main ways to calculate for pivot points: Standard, Woodie, Camarilla, and Fibonacci.
- Pivots can be extremely useful in forex since many currency pairs usually fluctuate between these levels. Most of the time, price ranges between R1 and S1.
- Pivot points can be used by range, breakout, and trend traders.
- Range-bound traders will enter a buy order near identified levels of support and a sell order when the pair nears resistance.
- Pivot points also allow breakout traders to identify key levels that need to be broken for a move to qualify as a strong momentum move.
- Sentiment (or trend) traders use pivot points to help determine the bullishness or bearishness of a currency pair.
- The simplicity of pivot points definitely makes them a useful tool to add to your trading toolbox. It allows you to see possible areas that are likely to cause price movement. You'll become more in sync to market movements and make better trading decisions.
- Using pivot point analysis alone is not always enough. Learn to use pivot points along with other technical analysis tools such as candlestick patterns, MACD crossover, moving averages crossovers, the stochastic, RSI, etc. The greater the confirmation, the greater your probability of a successful trade!
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