The Pivot Point technique

The Pivot Point technique is a favourite amongst traders for its calculation of Intraday support and resistance levels. The way it works is that it determines a certain number of psychologically important levels that relate to a specific currency pair.

The most important level is the pivot point, if prices evolve above it, it means that we're in an upward trend. The opposite is true for any evolution below this level.

You would therefore take a long position when prices climb past the pivot's level or a short position if the prices fall below the pivot level.

The support (S1 and S2) and resistance (R1 et R2) levels will provide us with objectives to take in our profits.

Also, check out the Pivot Points Forex Trading Strategy

Pivot Point Calculator for Forex Trading

This calculation formula uses yesterday's figures (high, low, closing price).

     

High:  
Close:  
Low:  
 
     
  Resistance 3 High + 2 x ( Pivot - Low )
  Resistance 2 Pivot + ( Resistance 1 - Support 1)
  Resistance 1 2 x Pivot - Low
  Pivot Point ( High + Low + Close ) / 3
  Support 1 2 x Pivot - High
  Support 2 Pivot - ( Resistance 1 - Support 1 )
  Support 3 Low - 2 x ( High -Pivot )

Automatically insert the pivot points into Meta Trader 4

Unzip and copy the two files in the "expert/indicators" folder:

-> Pivots_Daily_v1.mq4

On the MT4 platform, the file will available in the Programmed Indicators folder.