Sun. Jul 21st, 2024

What are Pivot Points?

Pivot points are popular technical analysis tools used by traders to identify potential market trends and support and resistance levels. They are calculated based on the previous trading session’s high, low, and close prices. In this article, we will explore how you can use pivot points on tradingview to enhance your trading strategy.

How to Add Pivot Points on TradingView

Adding pivot points to your TradingView charts is a straightforward process. Follow these steps to get started:

  1. Log in to your TradingView account or create a new one if you haven’t done so already.
  2. Select the financial instrument you want to analyze and open its chart.
  3. Click on the “Indicators” button located at the top of the chart.
  4. In the search bar, type “Pivot Points” and select the appropriate indicator from the list.
  5. Adjust the settings of the pivot point indicator according to your preferences, such as the calculation method and time frame.
  6. Once you have customized the settings, click on the “Apply” button to add the indicator to your chart.

Interpreting Pivot Points

Pivot points can be used to identify potential support and resistance levels in a market. These levels can act as turning points where price may reverse or breakout, providing entry and exit signals for traders.

Here are the key levels commonly derived from pivot points:

  • Pivot Point (PP): The central level calculated as the average of the previous session’s high, low, and close prices.
  • Resistance 1 (R1) and Support 1 (S1): The immediate levels above and below the pivot point, respectively.
  • Resistance 2 (R2) and Support 2 (S2): The next levels above and below R1 and S1.
  • Resistance 3 (R3) and Support 3 (S3): The furthest levels above and below R2 and S2.

Traders often pay close attention to these levels as they can indicate potential areas of interest for buying or selling.

Using Pivot Points for Trading

Traders employ different strategies when using pivot points. Here are a few common approaches:

1. Bounce Trading: Traders may look for price to bounce off a pivot level, suggesting a potential reversal. For example, if price reaches a support level (S1), a trader might consider buying.

2. Breakout Trading: Traders may wait for price to break through a pivot level, indicating a potential breakout. For example, if price breaks above resistance (R1), a trader might consider entering a long position.

3. Trend Confirmation: Traders may use pivot points to confirm the overall trend. If price consistently holds above pivot point (PP), it may signal an uptrend. Conversely, if price consistently holds below PP, it may suggest a downtrend.

Final Thoughts

Pivot points can be valuable tools for traders to identify potential support and resistance levels in a market. By incorporating pivot points into your trading strategy on TradingView, you can enhance your decision-making process and potentially increase your trading success. Remember to combine pivot points with other technical indicators and risk management strategies for a well-rounded approach to trading.

Start experimenting with pivot points on TradingView today and see how they can benefit your trading journey. Happy trading!

By admin