Pivot Points

A Pivot Point (usually referred to as PP) indicates an important price level in technical analysis of the forex market (the trading of currency pairs). The Pivot Point itself represents the strongest level of support and resistance, something worth knowing whether you're a trader or just signed up to lovemoney.com, therefore trading above or below the PP determines the overall market sentiment. If the pair is traded above, it is seen as bullish, if traded below, bearish.

Traders can calculate additional levels of suppport and resistance (S1, S2, S3, R1, R2, R3), and even midpoints (M1, M2, M3), utilizing various formulas.

Classic Pivot Points

This is the most popular method of calculation, which uses the following formula:

// H: high, L: low, C: close
R3 = H+2*(PP-L)
M5 = (R2+R3)/2
R2 = PP+R1-S1
M4 = (R1+R2)/2
R1 = (2*PP)-L
M3 = (PP+R1)/2
PP = (H+L+C)/3
M2 = (PP+S1)/2
S1 = (2*PP)-H
M1 = (S1+S2)/2
S2 = PP-R1-S1
M0 = (S2+S3)/2
S3 = L-2*(H-PP)

Woodie

Woodie's pivot points are similar to the classic one but more emphasis is given to the closing price of the previous period.

// H: high, L: low, C: close
R2 = PP+H-L
R1 = (2*PP)-L
PP = (H+2*C+L)/4
S1 = (2*PP)-H
S2 = PP-H-L

Camarilla

This method uses a set of 8 levels of support and resistance and no central pivot point.

// H: high, L: low, C: close
R4 = (H-L)*1.1/2+C
R3 = (H-L)*1.1/4+C
R2 = (H-L)*1.1/6+C
R1 = (H-L)*1.1/12+C
S1 = C-(H-L)*1.1/12
S2 = C-(H-L)*1.1/6
S3 = C-(H-L)*1.1/4
S4 = C-(H-L)*1.1/2

Using Pivot Points In Forex Trading

It is important to understand that pivot points and their derivative support and resistance levels themselves are NOT a trading strategy! They are merely a useful tool in a trader's toolbox. Only a refined combination of pivot points, leading and lagging indicators, divergence, price action, Fibonacci levels, Elliot Wave theory, and fundamental analysis can be the key to success. One such is our trading strategy we use for our profitable forex signals. A trader must also apply a proper money management.

An example of price action at pivot point levels in GBPUSD.

	profitable daily forex signals in your mailbox / intraday signal service Home Subscribe Performance Contact Us Disclaimer Blog Members' Area Forex signals for EUR/USD GBP/USD EUR/GBP EUR/JPY GBP/JPY USD/JPY. Pivot Points A Pivot Point (usually referred to as PP) indicates an important price level in technical analysis of the forex market (the trading of currency pairs). The Pivot Point itself represents the strongest level of support and resistance, something worth knowing whether you're a trader or just signed up to lovemoney.com, therefore trading above or below the PP determines the overall market sentiment. If the pair is traded above, it is seen as bullish, if traded below, bearish. Traders can calculate additional levels of suppport and resistance (S1, S2, S3, R1, R2, R3), and even midpoints (M1, M2, M3), utilizing various formulas. Classic Pivot Points This is the most popular method of calculation, which uses the following formula: // H: high, L: low, C: close R3 = H+2(PP-L) M5 = (R2+R3)/2 R2 = PP+R1-S1 M4 = (R1+R2)/2 R1 = (2PP)-L M3 = (PP+R1)/2 PP = (H+L+C)/3 M2 = (PP+S1)/2 S1 = (2PP)-H M1 = (S1+S2)/2 S2 = PP-R1-S1 M0 = (S2+S3)/2 S3 = L-2(H-PP) Woodie Woodie's pivot points are similar to the classic one but more emphasis is given to the closing price of the previous period. // H: high, L: low, C: close R2 = PP+H-L R1 = (2PP)-L PP = (H+2C+L)/4** S1 = (2PP)-H S2 = PP-H-L Camarilla This method uses a set of 8 levels of support and resistance and no central pivot point. // H: high, L: low, C: close R4 = (H-L)1.1/2+C R3 = (H-L)1.1/4+C R2 = (H-L)1.1/6+C R1 = (H-L)1.1/12+C S1 = C-(H-L)1.1/12 S2 = C-(H-L)1.1/6 S3 = C-(H-L)1.1/4 S4 = C-(H-L)1.1/2 Using Pivot Points In Forex Trading It is important to understand that pivot points and their derivative support and resistance levels themselves are NOT a trading strategy! They are merely a useful tool in a trader's toolbox. Only a refined combination of pivot points, leading and lagging indicators, divergence, price action, Fibonacci levels, Elliot Wave theory, and fundamental analysis can be the key to success. One such is our trading strategy we use for our profitable forex signals. A trader must also apply a proper money management. An example of price action at pivot point levels in GBPUSD.* Forex Signals \| Subscribe \| Contact Us \| Disclaimer \| Pivot Points \| Forex Blog \| Members' Area