Pivot Points

A pivot point is the analysis used to indicate and determine the general trend of the market after periodical time frames. It is simply calculated by finding the average of the high, low and closing prices from previous trading day. The following day, trade above the point is assumed to be a bullish process while the trade below pivot is assumed to be bearish sentiment.

Pivot point does not function alone to predict the price. It is used alongside support and resistance levels. This process is similar to a trend line. Analyses the pivot point, width of the trading range between the pivot point and the previous day high or low prices. Support and resistance levels are calculated using full width of the high and low prices of the previous day.

Pivot Points as a Technical Analysis method, cam be used to analyze the past or previous trade movements to approximate figure that can be used to predict the present trend.