Pivot Points: The Secret Weapon of Traders to Dominate the Market

Have you ever noticed how some traders always seem to know where the price is going to stop? They are probably using pivot points.

What exactly is it?

Pivot points are a classic technical indicator that traders have used since the days of trading floors. The idea is simple: by taking the high, low, and close of the previous day, one can calculate key levels where the price may bounce or collapse.

The magic formula :

• Pivot Point (P) = (High + Low + Close) / 3
• Support 1 (S1) = (P × 2) – Top
• Support 2 (S2) = P – (High – Low)
• Resistance 1 (R1) = (P × 2) – Base
• Resistance 2 (R2) = P + (High – Low)

How does it work in practice?

When the price trades above the pivot, it is bullish. When it dives below, it is bearish. The S1/S2 and R1/R2 levels become your ideal entry/exit points.

For example, you can set a stop-loss near S2 or take profit at R1. It's like having a map of the terrain before the battle.

The limits you need to know

Warning: this is not magic. These levels are calculated simply, and the price does not always stop there. You will see breakouts, multiple bounces, traps. Always use this with other indicators, never alone.

The true power of pivots? Combining them with momentum, volumes, patterns. It's a tool in your toolbox, not the whole toolbox.