Pivot Points – Support and Resistance Lines (PP)

The Pivot Points indicator refers to the average price and the possible support and resistance levels within a certain period of time. We get the current values ​​of the indicator from data in the previous period.
 This index is often based on daily, weekly or monthly charts. It is one of the main indicators used in FXLORDS’ Forex Trading Signals.

Pivot Points’s period must differ from the price chart’s period by at least one period. If the time period is the same used in both cases, the indicator’s lines will look like a point and will not provide any information whatsoever. For example, if you put the indicator on the daily chart, then with each trading day you will see points instead of lines. If the indicator’s period is less the price’s period, you will not see values ​​at all.
When analyzing the market using this indicator, it is recommended to use many Pivot Points, monthly, weekly and even yearly. If two or more levels of the Pivot Points line up, it increases the strength of this line, and therefore, we should wait until the price actually breaks the levels before buying or selling.

Support and resistance levels, set using this indicator, usually lead to an accurate forecast of possible take profit and cut loss levels.
Here are some rules when using this indicator:

-If the Pivot Points are close to the opening price and with the direction of the current price, it is likely that the trend will continue in the same direction.

– In low volatility or illiquid markets, and when the price drops below the Pivot Point, one should avoid opening any new positions, because the price will probably “re-test” that level, which is also very common in this context. If the driving forces are able to break this level, one should trade based on support and resistance levels of this indicator. And when the trend is confirmed by using another indicator, then this practice will help with entering the market at better prices.

For long-term trading, you must consider the Pivot Point’s weekly, monthly and yearly positions on the charts. It is clear that if the price was lower than those levels, we may be close to the beginning of a strong downward trend. On the other hand, if the price is higher than the weekly, monthly or annual levels, it confirmed that the price is in upward trend.