Resistance, Support aur pivot point.

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A pivot point is a price level of significance in technical analysis of a financial market that is used by traders as a predictive indicator of market movement.

A pivot point is calculated as an average of significant prices (high, low, close) from the performance of a market in the prior trading period.

A pivot point and the associated support and resistance levels are often turning points for the direction of price movement in a market.

In an up-trending market, the pivot point and the resistance levels may represent a ceiling level in price above which the uptrend is no longer sustainable and a reversal may occur.

Several methods exist for calculating the pivot point (P) of a market. Most commonly, it is the arithmetic average of the high (H), low (L), and closing (C) prices of the market in the prior trading period:[2]

P = (H + L + C) / 3.

The pivot point itself represents a level of highest resistance or support, depending on the overall market condition.

The support and resistance levels calculated from the pivot point and the previous market width may be used as exit points of trades, but are rarely used as entry signals.

Support and resistance is a concept in technical analysis that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels.

A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level.

A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.

Support and resistance levels can be identified by trend lines (technical analysis). Some traders believe in using pivot point calculations.

The more often a support/resistance level is "tested" (touched and bounced off by price), the more significance given to that specific level.

If a stock price is moving between support and resistance levels, then a basic investment strategy commonly used by traders, is to buy a stock at support and sell at resistance,

Pivot points are very useful tools that use the previous bars' highs, lows and closings to project support and resistance levels for future bars.