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Forex Pivot Point Trading Tips PDF Print E-mail

Here are some easy to memorize tips that will help you to make smart pivot point trading decisions.

  • If price at PP, watch for a move back to R1 or S1.
  • If price is at R1, expect a move to R2 or back towards PP.
  • If price is at S1, expect a move to S2 or back towards PP.
  • If price is at R2, expect a move to R3 or back towards R1.
  • If price is at S2, expect a move to S3 or back towards S1.
  • If there is no significant news to influence the market, price will usually move from P to S1 or R1.
  • If there is significant news to influence the market price may go straight through R1 or S1 and reach R2 or S2 and even R3 or S3.
  • R3 and S3 are a good indication for the maximum range for extremely volatile days but can be exceeded occasionally.
  • Pivot lines work well in sideways markets as prices will most likely range between the R1 and S1 lines.
  • In a strong trend, price will blow through a pivot line and keep going.

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    Summary

  • Pivot points are a technique used by professional traders and market makers to determine entry and exit points for the trading day based on the previous day’s trading activity. It’s best to use this technique after determining the direction of the trend.

  • As the charts above show, pivots can be extremely useful in Forex since many currency pairs usually fluctuate between these levels.

  • 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 bona fide breakout.

    • 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.

    • Learn to use pivot points along with other technical analysis tools such candlestick patterns, MACD crossover, moving average crossovers, Stochastics overbought/oversold levels. The greater the confirmation, the greater your probability of success!
     
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