Pivot Points Standard indicator

Admin
March 03, 2023

Pivot Points Standard is a popular technical analysis tool used by traders to identify potential levels of support and resistance for an asset. It is calculated based on the previous day's high, low, and close prices, and is used to predict potential price levels for the upcoming trading session.

The formula for Pivot Points Standard is as follows:

  • Pivot Point (PP) = (High + Low + Close) / 3
  • Resistance 1 (R1) = (2 x PP) - Low
  • Resistance 2 (R2) = PP + (High - Low)
  • Resistance 3 (R3) = High + 2 x (PP - Low)
  • Support 1 (S1) = (2 x PP) - High
  • Support 2 (S2) = PP - (High - Low)
  • Support 3 (S3) = Low - 2 x (High - PP)

Where:

  • High: the highest price traded in the previous session
  • Low: the lowest price traded in the previous session
  • Close: the closing price of the previous session
  • PP: the pivot point
  • R1, R2, R3: the first, second, and third levels of resistance, respectively
  • S1, S2, S3: the first, second, and third levels of support, respectively

The Pivot Points Standard formula can be used by traders to identify potential levels of support and resistance for an asset, which can help them to determine when to enter or exit a trade. By looking at the current price level in relation to the pivot point and the levels of support and resistance, traders can identify potential entry and exit points, as well as stop loss and take profit levels.

One of the main benefits of using Pivot Points Standard is that it provides traders with a clear and simple framework for analyzing an asset's price movements. It is a widely used and popular technical analysis tool, and is commonly used in conjunction with other indicators and chart patterns to identify trading opportunities.

However, it is important to note that Pivot Points Standard is not infallible, and should be used in conjunction with other forms of analysis and risk management strategies to minimize losses and maximize profits. Additionally, it is important to consider other market factors, such as news events and economic data releases, that may impact an asset's price movements.