Resistance, Support aur pivot point.

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 trend, the pivot point and the resistance levels may represent a ceiling level for the price. if price goes above this level the uptrend is no longer sustainable and a trend reversal may occur.

In a down trend , a pivot point and the support levels may represent a low for price level or a resistance to further decline. The central pivot point can then be used to calculate the support and resistance levels

Pivot points consist of a central point level surrounded by three support levels below it and three resistance levels above it. These points were originally used by floor traders on equity and futures exchanges because they provided a quick way for those traders to get a general idea of how the market was moving during the course of the day using only a few simple calculations.

The pivot point itself represents a level of highest resistance or support, depending on the overall sentiment. If the market is direction-less ( range bound ) prices will often fluctuate greatly around this level until a price breakout develops.

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

Pivot Point Calculator calculates levels that are likely to cause price movement. Pivot point is the primary support/ resistance level at which the main trend will be born. First-third level resistance and support points serve as additional indicators of possible trend reversal or continuation.

Support and resistance levels define levels at which the price of an asset is expected to have difficulty crossing. For example, if gold falls through its pivot point at the beginning of a downtrend, its price is expected to stabilize at the first support level.

Resistance levels work similarly but in an opposite fashion. For instance, the price of gold may cross through its pivot during a major uptrend, but slow as it reaches the first resistance level. Here again, the level is a test. It may hold or it may be breached, both outcomes of which send different signals to traders.

Additionally, support and resistance levels are quite easy to understand and can be seen visually on a chart, thus investors find pivot points to be easy to learn and useful especially during options with a short time to expiry.

Pivot points are a widely recognized trading tool which have long been used by financial traders. They allow for a quick and easy calculation to be made which identifies the expected market bias and potential support and resistance levels either side of the current market price.

The main reason pivot point trading has gained so much popularity is that pivot points have a predictive nature and are also easily calculated. Traders use the information regarding the prior day in order to calculate potential turning points for the current day, the day he/she intends to trade.

Support and resistance levels are used very often by traders for providing a signal of when to enter or exit a trade. Since they are broadly established key points of price reversals, it is common that prices will rebound back up after hitting a support level, given you have defined them well.

It is not uncommon for prices to come back to the breakout level before they continue on. This way a resistance can begin acting as a support and vice versa.

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