Pivot Points in Forex

Pivot Points are a widely used technical indicator in Forex trading to determine potential support and resistance levels for a specific trading day. They are calculated based on the previous day's high, low, and closing prices. The main Pivot Point represents the average of these prices. Traders then calculate additional support and resistance levels, known as S1, S2, R1, and R2, based on the Pivot Point value.
These levels act as critical reference points to assess price movements throughout the day. If the price remains above the Pivot Point, it suggests a bullish sentiment, while trading below it indicates a bearish sentiment. Traders use Pivot Points to identify potential entry and exit points, gauge market sentiment, and set profit targets and stop-loss levels.