Trade Bitcoin Trading

Trading Bitcoin Using Pivots

Pivot Points are indicators originally created by floor traders in the commodities market to identify potential market reversal points, known as pivots. These points are calculated to determine the levels where the prevailing market sentiment might shift from bullish to bearish or vice versa.

Bitcoin traders use these points as markers of support and resistance levels.

These pivot points are calculated as the average of the high, low and close from the previous session:

Pivot Point = (High + Low + Close) / 3

Intraday traders employ calculated pivot point levels to establish optimal entry points, as well as precise locations for setting their stop-loss and take-profit targets for their Bitcoin transactions. Pivot points essentially attempt to map out the price levels where the highest concentration of order placement by traders is occurring simultaneously - where consensus among Bitcoin traders is strongest.

In analysis, a pivot point level is a significant financial trading market indicator that is used by currency traders to predict the price movement. This btcusd indicator is calculated as an average of the significant prices (high, low and close) from the performance of market prices in the previous period.

Bullish Sentiment: When prices in the following period trade above the central pivot point, it indicates a bullish market sentiment. Bearish Sentiment: Conversely, if prices trade below the central pivot point in the subsequent period, this reflects a bearish market sentiment.

The central pivot point is also used to calculate additional levels of support & resistance, below and above this central pivot point, respectively - by either adding or subtracting the price differentials calculated using the previous trading data.

A Pivot point, along with its associated support and resistance demarcations, frequently serves as a critical inflection point influencing the ensuing direction of market price movement.

In an upward trend - price stays above the pivot point, the resistance areas may represent a ceiling level for the market price and if prices go above these technical levels then the up trend is no longer sustainable and a retracement may occur.

During a downward trend - where the price consistently remains beneath the pivot point - the established support levels can act as a floor for the market price. If the prices then fall beneath these technical markers, it suggests the downtrend lacks sustainability, potentially leading to a rally (a corrective upward move).

The Central Pivot Point helps figure out support and resistance zones this way.

Pivot points have a middle level with 3 support levels under it and 3 resistance levels above it. People trading stocks and futures used these pivot points because they quickly showed them how the market was moving during the day with just a few calculations. As time passed, these pivot points also became very helpful in other trading markets.

Pivot points gained fame as a leading tool. They predict moves, unlike lagging indicators.

Calculation of pivot points for the ensuing (or current) trading day necessitates only the preceding day's high, low, and closing prices. These 24-hour cycle pivot points, a feature of this technical indicator, are derived using the following mathematical expressions:

The central pivot point then can be used to calculate the 3 support and 3 resistance levels as follows:

Resistance 3 Resistance 2 Resistance 1 Pivot Point Support 1 Support 2 Support 3

The Pivot Points is illustrated below:

Pivot Points for Bitcoin Trading - BTCUSD Pivot Indicator Guide

Bitcoin Using Pivot Points

Pivot Points Analysis

The central pivot point acts as strong support or resistance. It depends on market mood. In flat markets without clear direction, prices swing hard around it. They stay that way until a breakout happens.

Prices above or below the central pivot point shows the overall sentiment as bullish and bearish respectively. Pivot Point technical indicator is a leading technical indicator that provides market signals of potentially new highs or lows within a given chart timeframe.

Support and resistance areas are very important places to exit trades. For example, if Bitcoin's price is rising and goes past the main pivot point, it is likely to go to the first and then the second resistance area. Traders might want to close their buy trades at the second resistance area, because the price is very likely to change direction near each resistance level.

In pivot point analysis, there are usually three levels above and below the main pivot point that people look at. These levels are figured out by using the range of the Bitcoin price from the last trading period, and then adding it to the main pivot for resistance levels and taking it away from the main pivot for support levels.

Pivot Points trading analysis is used in 3 ways:

BTCUSD Trend Direction: Central pivot point is useful when determining the general trend of BTCUSD prices. Trades are only opened in direction of the market trend. Buy trades are opened when price of Bitcoin is above the center pivot point & sell trades are opened when the price of Bitcoin is below the central pivot point.

Price Breakout: In a price breakout a bullish signal is when prices break upwards through the central pivot point or one of the resistance levels (commonly Resistance Level 1). A sell signal is when price breaks-out down-ward through the central pivot point or one of the support levels (often Support Zone 1).

Trend Reversals: Within a trend reversal scenario, a buy signal materializes when the asset's price approaches a support level - typically Support 2 or Support 3 - and either touches or slightly penetrates this support before changing direction and moving upward.

A sell trading signal occurs when price moves towards a resistance area, often Resistance 2 or Resistance 3, and the price of Bitcoin Currency touches the resistance level or only moves a little through it & then reverses and starts moving in the other direction.

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