Pivot points trading indicator

Pivot Points is a technical analysis indicator that shows potential support and resistance levels derived from the price movements during the previous period.

Formula:

Several pivot points are calculated in trading: together with the central level, several additional support and resistance levels are calculated.

Pivot Point (PP) = (Prev.High + Prev.Low + Prev.Close) / 3
Support 1 (S1) = (2 * PP) - High
Resistance 1 (R1) = (2 * PP) - Low
Support 2 (S2) = PP - (High - Low)
Resistance 2 (R2) = PP + (High - Low)

Key Takeaways:

1. Pivot points are commonly used by traders to identify potential support and resistance levels.
2. Traders often use pivot points along with other indicators to determine market trends and determine entry and exit points.

Counterarguments:

1. Pivot Points can be subjective and vary from trader to trader.
2. Pivot Points may not work in fast-moving markets or extreme market conditions.
3. Pivot Points may generate false signals in choppy markets.