Trade Forex Trading

How to Use Pivots Points for Day Trading - Trend Indicators

How to use Pivot Points in day trading forex - learn how to analyze and interpret Pivot Points Levels and how to trade Pivot Points Reversal signals explained.

Pivot Points are used by traders to find support and resistance zones based in the previous day's price action.

This Pivot Points is a very useful tool that uses the previous bars' highs, lows & closings to project support & resistance levels for future bars.

Pivot Points provides an idea of where key support & resistance should be. Place the pivot points on your currency charts and the price will bounce off one of these levels. These levels are used by investors to determine market tops, market bottoms or trend reversals.

  • Daily pivots point levels are calculated using the previous day's high, low, close which ends at 5.00pm EST(2100 GMT)

This indicator is displayed & shown below

How Do I Use Pivot Points in Forex Trading? - How Do I Day Trade Pivot Points Levels and Reversal Signals?

Analysis in Forex Trading

The center pivot point itself is the primary level, which is used to determine the trend

The other support & resistance zones are also important in calculating areas that can generate significant market moves.

This indicator can be used in 2 ways

The first way is for determining overall trend: if the pivot point is broken in an upward movement, then the market is bullish, and vice versa. However, pivot levels are shortterm trend indicators, useful only for one day until they need to be recalculated.

The second method is to use these points to enter & exit the markets. This trading indicator is a helpful and useful tool which can be used in calculating the areas which are likely to cause price movement.

These points and levels should be used in conjunction with other forms of technical analysis like Moving averages, MACD & stochastic oscillator indicator.

This indicator can be used in many various different ways. Here are a few of the most regular methods for utilizing them.

Trend Direction: Combined with other trading analysis methods like overbought/oversold oscillators, volatility measurements, the central point may be useful in determining the general trending direction of the currency exchange market. Trades are only opened in direction of market trend. Buy signal occurs only when the market is above the central pivot point & sell trade signal occur only when the market is below the central pivot points.

Trading Price Breakouts: A bullish trading signal occurs when the market breaks up through the central pivot point or one of the resistances (generally Resistance Level 1). A bearish signal occurs when the market breaks down through the central point or one of the supports (mostly Support Zone 1).

Trend Reversals:

  • A buy signal forms when market price moves toward a support level, gets very near to this point, touches this point, or moves only slightly through this level, and then reverses and moves back in the opposite market trend direction.

  • A sell signal forms when market price moves toward a resistance level, gets very near to this point, touches this point, or only moves a little through this level, and then reverses and moves back in the opposite trend market direction.

Stop loss and/or Limit Profit Values Determined by Support/Resistance: This indicator may be potentially helpful in figuring out suitable stoploss and/or limit profit placements. For examples, if trading a long break out above the Resistance 1 it might be practical to position a stop loss.

Combining with Moving Average Cross-over System

A good indicator to combine and trade reversal signals is the MA cross over which can be used to confirm the direction of a reversal signal.

An investor can then open an order once these 2 indicators give a signal in the same direction.

How to Day Trade Pivot Points Levels and Reversal Signals

Moving Average Cross-over Technique

Moving Average(MA) crossover method that can be combined with this technical indicator to come up with a system for generating buy & sell signals.

To download this Pivot Points Indicator:

https://c.mql5.com/21/9/pro4x_pivot_lines.mq4

Once you download the trading indicator. Open it with the MQL4 Language MetaEditor, Then Compile the indicator by pressing the Compile Button & it will be added to your MT4.

NB: Once you as a trader add the indicator to your MT4 Platform, the indicator has extra lines referred to as Mid Points, to remove the additional lines open MQL4 MetaEditor(short cut key board key - press F4), and change line 16 from:

Extern bool midpivot = true:

To

Extern bool midpivot = false:

Then Press Compile again, and the indicator then will appear and be shown as exactly portrayed on this web site.

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