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Pivot Points Technical Analysis & Pivot Points Signals

This indicator consists of a central pivot which is surrounded by 3 resistance areas above and 3 support levels below.

Initially these points were used by floor traders to analyze and trade the equities & futures exchange markets. This indicator is considered to be leading rather than lagging.

Pivots provide a quick way for traders to analyze the general trend of how the market is going to be moving during the course of the day. A few simple calculations are used to plot the resistance and support levels.

To calculate these points for the coming trading day is the previous day's

  • high,
  • low, and
  • close prices are used

The Forex trading day closes at 5:00PM EST this daily market closing time is when the indicator is updated.

The 24-hour cycle for this indicator are calculated using a complex formula. The central pivot is then used to calculate the support and resistance levels as follows:

Resistance 3

Resistance 2

Resistance 1

Pivot Point

Support 1

Support 2

Support 3

Pivot Points Trading Analysis - Indicators MT4 Pivot Points

Technical Analysis & How to Generate Forex Signals

This indicator can be used in different ways to generate Forex signals. The following techniques are the most common technical analysis:

Trend Identification Signals

The central pivot is used by traders to determine the general market trend direction. The trades taken will only be in direction of the market trend.

  • Buy signal - price is above the central point
  • Sell signal - price is below the central point

Price Breakout Signals

Price breakout trading signals are generated as follows

  • Buy signal - is generated when price breaks-out upward through the central point.
  • Sell signal - is generated when price breaks out downward through the central point.

How to Build a Pivot Points Strategy

Price Breakout

Price Reversal Signal

Price reversals are generated as follows

Buy Forex Signal- when the price moves down toward one of the support area, then touches support or moves just slightly through it then quickly reverses and moves upward.

Sell Signal- when price moves up toward one of the resistance level, then touches the resistance or moves slightly through it then quickly reverses and moves downward.

Pivot Point Levels - How to Build a Pivot Points System

Price Reversal Signal

Setting Stop loss & Limit Profit Values

The central pivot & the other support and resistance zones are used by traders to determine suitable stop loss & limit profit levels.

Setting Stop loss and Limit Profit Support Resistance Levels - Pivot Points Indicator Analysis

Setting Stop loss & Limit Profit

If a buy is placed above the central point the Resistance 1 or Resistance 2 can be used to set the take profit level, & the Support 1 can be set as a StopLoss Level for the trade.

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 indicator by pressing the Compile Button and it will be added to your MT4.

NB: Once you add it to your MT4, the indicator has additional lines named Mid-Points, to remove the additional lines open MQL4 Meta Editor(shortcut keyboard key - press F4), & change line 16 from:

Extern bool midpivots = true:

To

Extern bool midpivots = false:

Then Press Compile again, & it will then appear as exactly illustrated on this site.