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!