About Pivot Point Calculator Forex

Many traders have probably heard the term pivot points and recognize that they have some bearing on price action. However, most individual traders and even brokers are not familiar with the pivot point formula, perhaps because of the time involved in calculating the numbers. But professional traders including myself look at pivot points, so you should probably be aware of what they are. Some recent chart examples below reflect the validity of the pivot point concept. With pivot point in the name, you might guess that these points are very significant to some traders, especially to those “old school” traders who have been following pivot points for many years.

A pivot point is simply a computed number based on the high, low and close of the previous price bar, whether the time period is a day, a week or a month. Using that pivot point number, traders calculate support and resistance levels, which are considered to be price brackets for the current time period.

To determine current support/resistance levels, the first step is to find the pivot point number:
PP = (H + L + C)/3

The first resistance level(R1)=(PPx2)-L
The second resistance level (R2)=PP+H-L
The fist support level (s1)=(PPx2)-H
The second support level (S2)=PP-H+L

All right, now that we have that established you can see it is a detailed formula. So let’s try to simplify it. Consider the pivot point as the average of the previous sessions trading range combined with the closing price. The numbers of support and resistance that are calculated indicate the potential ranges for the next time frame based on the past weight of the markets strength or weakness derived from the calculations of the high, low and distance from the close of those points. Pivot point analysis is also used for identifying breakout points from the support and resistance numbers. The previous sessions trading range could be based and calculated for an hour, a day, a week or a month. Most trading software includes these numbers on a daily basis so that you do not have the tedious chore of doing it the old fashion way, by hand using a calculator. The really old fashion way doesn’t use a calculator. Don’t make your job harder try the easy way.