XAUUSD Pivot Points
Pivot points is a set of indicators created by floor traders in the commodities markets to ascertain the potential turning points, also known as "pivots". These points are calculated to determine levels in which the sentiment of the xauusd trend could change from "bullish" to "bearish." XAUUSD traders use these points as markers of support & resistance.
These points are calculated as the average of the high, low & close from the previous session:
XAUUSD Pivot Point = (High + Low + Close) / 3
Day traders use the calculated pivots to determine levels of entry, stops and profit taking, by trying to determine where the majority of other xauusd traders may be doing the same.
A pivot is a gold price level of significance in technical analysis of a financial market that is used by traders as a predictive indicator of gold price movement. It's calculated as an average of significant gold prices (high, low & close) from the performance of a market in the prior trading period. If the gold prices in the following period trades above the central point it is usually evaluated as a bullish sentiment, whereas if gold price below the central point is seen as bearish.
The central point is used to calculate additional levels of support and resistance, below & above central point, respectively, by either subtracting or adding gold price differentials calculated from previous trading ranges.
A pivot-point and the associated support & resistance levels are often turning points for the direction of gold price movement in a market.
- In an up xauusd trend, the pivot point & the resistance levels may represent a ceiling level for the gold price. If gold price goes above this level the up xauusd trend is no longer sustainable and a xauusd trend reversal may occur.
- In a down xauusd trend , a pivot point & the support levels may represent a low for gold price level or a resistance to further decline.
The central pivot can then be used to calculate the support & resistance areas as follows:
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 xauusd market was moving during the course of the day using only a few simple calculations. However, over time they have also proved exceptionally useful in other markets as well.
One of the reasons they are now so popular is because they are considered a "leading" (or predictive) technical indicator rather than a lagging indicator. All that is required to calculate the pivot points for the upcoming (current) day is the previous day high, low, and close gold prices. The 24-hour cycle pivot points in this indicator are calculated according to the following formulas:
The central pivot can then be used to calculate the support & resistance areas as follows:
Resistance 3
Resistance 2
Resistance 1
Pivot Point
Support 1
Support 2
Support 3
Pivot Points Support & Resistance Areas
Pivot Points as a XAUUSD tool
The pivot point itself represents a level of highest resistance or support, depending on the overall sentiment. If the xauusd market is direction-less ( range bound ) gold prices will often fluctuate greatly around this level until a gold price breakout develops. XAUUSD Prices above or below the central point indicates the overall sentiment as bullish or bearish respectively. This xauusd indicator is a leading XAUUSD indicator that provides signals of potentially new highs or lows within a given chart time frame.
The support and resistance levels calculated from the central pivot point & the previous market width may be used as exit points of the open XAUUSD trades, but are rarely used as entry signals. For example, if the gold price is up-trending and breaks through the pivot point, the first or second resistance level is often a good target to close a position, as the probability of resistance and reversal increases greatly, with every resistance level.
In pivot-point analysis 3 levels are oftenly recognized above & below the central point. These are calculated from the range of gold price movement in the previous trading period & then added to the central point for resistances and subtracted from it for support levels.
Pivot Points
Pivot levels can be used in many different ways. Here are a few of the most common methods for utilizing them:
XAUUSD Trend Direction: Combined with other XAUUSD Trading analysis techniques such as overbought/oversold oscillators, volatility measurements, etc., the central point may be useful in determining the general trending direction of the market. Trades are only taken in the direction of the XAUUSD trend. Buy trades occur only when the price is above the central point and sell gold trades occur only when the price is below the central pivot.
XAUUSD Price Breakouts: In gold price breakouts, a bullish buy signal occurs when the price breaks up through the central point or one of the resistance levels (typically Resistance 1). A short sell signal occurs when price breaks down through the central point or one of the support levels (typically Support 1).
XAUUSD Trend Reversals: In xauusd trend reversals, a buy signal occurs when the price moves towards a support level, gets very close to it, touches it, or moves only slightly through it, and then reverses and starts moving in the other direction.
To download Pivot points:
https://c.mql5.com/21/9/pro4x_pivot_lines.mq4
Once you download it open it with MQL4 Language Meta Editor, Then Compile the technical indicator by pressing Compile Button and it'll be added to your MetaTrader 4.
Note: Once you add it to your MT4, the technical indicator has additional lines named MidPoints, to remove the additional lines open MQL4 Meta Editor(short cut key-board key - press F4), & change line 16 from:
Extern bool midpivots = true:
To
Extern bool midpivots = false:
Then Press Compile button again, and it will then appear as exactly illustrated on www.tradeforextrading.com website.
