Pivot Points by Jayanthi Gopalakrishnan Classic techniques still work on charts at all time levels, and the most basic charting technique is the identification and development of pivot points. Take a look. Cut your losses, ride your profits! That adage should be familiar to all traders, and it may buzz through their minds as something taken for granted but not easy to implement. The pivot point technique can help you do both. Floor traders use pivot points to determine critical price and support/resistance levels. It is a relatively simple calculation that can be jotted on the back of a trading card for easy reference. Off-floor traders who have the luxury of looking at monitors with real-time datafeeds can adopt this technique as well. CALCULATION A pivot point is the price at which the direction of price movement changes. It is calculated using data from the previous trading day. By looking at the high,low,and close, you can calculate the next day’s pivot point as well as support and resistance levels. Many variations exist for calculating the pivot point and related support and resistance levels. Here are a few: |
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