Support and Resistance zones

PIVOT POINTS

Pivot Points, also known as Floor Trader Pivot Zones or pivots are a method of technical analysis. They act as resistance and support are, in contrast to visual support and resistance zones but mathematically calculated. Especially in the Forex market pivot points are very popular because they are there also used by institutional traders, known as Floor Traders.
Pivot Points are calculated, in which process the high, low, the opening and closing price of the last trading session approach draws. As a final price is the price here usually taken when the New York session ends (22 clock Berlin).

The pivot points are then calculated as follows:

Pivot point (PP) = (High + Low + Close) / 3

The first level of resistance and support
First support (S1) = (2 * PP) High
First resistance (R1) = (2 * PP), Low

The second level of resistance and support
Second support (S2) = PP (High Low)

Second resistance (R2) = PP + (High - Low)

But what you can now do with these pivot points? On the attached graphic you can see that the pivot point acts as a support has twice as well as the lower support line (S1). The upper resistance line, however, was never broken, even though the price was very close to her.

We have on the chart does not clearly defined direction and find ourselves more in a sideways trend. Under these circumstances it is not easy to act, but there were a few good ways to earn money here. They observe the development in the middle of the chart, the pivot point as the price has broken down and the first resistance line (S1) affected. The price stopped almost exactly on the line and then climbed right back up (green bar). It was very likely that the price reached at least the pivot point, after he has respected the S1 line as support.

In my opinion, they work even better in Forex Pivots in sideways trends and bring order to the chaotic movements at first glance. Unfortunately, you can also see that the pivot points do not always work, but that is Forex. The points can also be used for breakouts (red bar breaks by S1) and are therefore versatile in application.