Forex Pivot Point

Forex Pivot Point is a key level where traders' and investors' feelings shift from bullish to bearish or the other way around. These points are super important because many individual forex traders, banks, and institutional traders trust them. It’s pretty well-known among traders that pivot points are vital for gauging the strength and weakness of any market.

The Importance of Pivot Points in Forex Trading

Floor traders really love pivot points! They act like magnets for price movements. If you keep an eye on how prices behave during trading sessions, you'll see they often pause or stop at these pivot points before moving again. To figure out daily forex pivot points, you just need the High, Low, and Close prices from the previous day. It’s super simple: plug these three prices into the Forex Pivot Points tool, and it will give you all the values.

How to Calculate Forex Pivot Points

• P = (High + Low + Close) / 3;


• R1 = 2 * P - Low;


• R2 = P + (R1 - S1);


• R3 = High + 2 * (P - Low);


• S1 = 2 * P - High;


• S2 = P - (R1 - S1);


• S3 = Low - 2 * (High - P)

You can see from this formula that with just the previous day's high, low, and close prices, you end up with seven different points: three resistance levels, three support levels, plus the actual pivot point.

Understanding Market Biases with Pivot Points

If the market opens above the pivot point, it suggests a bias towards long trades for that day. On the flip side, if it opens below this point, short trades become more likely.

The Key Levels: R1 & S1

The most crucial pivot points are R1, S1, and the main pivot itself. The general idea when trading using these points is to look for reversals or breaks at R1 or S1. By the time prices hit R2 or R3—or S2 or S3—the market is usually overbought or oversold; those levels are better for exits rather than entries.

Requirements:

• .NET Framework