Daily Pivot is one of tool indicator. The use of this indicator is quite simple to help trader in monitoring market trends without combining it with other indicator. Why is that so? Because this indicator is quite reliable to determine trends or consolidation within the market. It will work well when used in combination with other technical indicator such as Fibonacci. The pivot points are measured using the top, bottom and close prices of a prior day, week or month.
Most traders like to use this indicator because of its basic characteristic which tends to be objective in reading the chart movement. It’s different with other indicators that sometimes have subjective perception in reading the market.
There are three different levels of support and resistance which are calculated beyond and under the pivot point. The three levels of resistance are referred to as R1, R2 and R3 while the three levels of support are referred to as S1, S2, and S3. The support and resistance levels are mainly used as trade exits. Resistance point is where the price won’t continue rising.
Traders may use this indicator to analyze market and also to determine the entry-exit levels. When the recent price is moving beyond the daily pivot point, it’s a good signal for traders to open a long position. While a short position could be initiated when the recent price is moving under the daily pivot point. Quite simple, isn’t it? Actually, pivot point is very useful for PAMM traders whose gain is a short-term profit came from a slight price movement.
The strength point of this indicator is that it’s able to detect breakout areas. An indication that the breakout point is on the way may be predicted when the boundary line is crossed. Even though this indicator is able to identify market trend just like the other indicator could do, pivot point can forecast the trend more accurately since it has a blue line which is able to detect the trend waves. If the existing market price crosses this blue line, it may possibly a signal of a coming reversal trend.
The pivot points are designed to be used in median-to-bottom time frame. Time frame from m15 – h1 is quite ideal for you to trade in using this pivot point indicator. It won’t suit on time frame D1 or h4 which has a small range between the existing pivots.
Okay, that’s all of our discussion about pivot point and how it works in reading the market. Thanks for reading, and happy trading in PAMM Investments !!
Don’t forget to read this important article for PAMM trader
1. How to become a PAMM Trader
2. Understanding your Forex Trader Level as PAMM Trader