Pivot Points Indicator Guideline
Pivot points indicator MT4 provides chartists with significant daily levels on MT5 charts also. In fact, day traders employ them as entry and exit levels. That is why forex traders are extremely using the pivot points Tradingview indicator to predict bullish and bearish movements. So that they would be able to predict the overall direction. In our course, we will examine this technical indicator for MetaTrader platforms. Also, we will learn how to develop an overall trading strategy based on pivot points indicator levels. The indicator is Free Download via Finansya!
Pivot Point Indicator
What is a Pivot Points indicator ?
Forex pivot points display trading levels that are used by forex and crypto traders to identify the overall market directions in various timeframes. In other words, the pivot trading approach helps currency traders to judge whether prices are bullish or bearish.
In conclusion, a pivot points strategy serves as a possible price analyzing indicator.
The pivot point levels are the main levels of the overall direction. However, it involves additional support and resistance levels too. To explain, the later levels are calculated based on the pivot point calculation itself. Generally, Pivot levels assist forex CFDs traders to mark where the price might encounter support or resistance. Likewise, when the price cuts those levels, it’s an indication of tendency continuation in Tradingview chart.
Classic pivot point
The Classic version of this technical indicator is also called Standard or Floor Pivot Points. In fact, it’s the most basic type used in pivot trading. To explain, this Central Pivot allows you to outline support and resistance levels.
1. P in classic pivot points
The letter P designates the Classic pivot point. To clarify, the Pivot Points strategy uses the arithmetic average of close (C), high (H), and low (L) prices of the previous trading period. The calculation is as follows:
Pivot Point (Standard P) = (High + Low + Close) / 3
2. R1 R2 R3 in classic PP
There are three separate resistance levels (R1, R2, and R3) calculated under that pivot point. We obtain the prime and most important support level (S1) by identification of the lower half of the previous trading range. Note that the lower half of the previous trading range is described as the difference between the pivot point (P) and the Low (L) price. Consequently, the computation is:
- Resistance (R1) = P + (P − L) = 2×P − L
To obtain the second resistance level, we add the full width of the previous trading range (H − L) to the pivot point value:
- Resistance (R2)= P + (H − L)
Finally, we add another trading range for the next upper level (R3).
3. S1 S2 S3 in classic PP
There are three distinct support levels (S1, S2, and S3) calculated over the pivot point. We obtain the prime and most important support level (S1) by identification of the upper half of the previous trading range. Note that the upper half of the previous trading range is described as the difference between the high (H) price and the pivot point (P). As a result, the calculation is:
- Support (S1) = P − (H − P) = 2×P − H
To obtain the second support level, we subtract the full width of the previous trading range (H − L) from the pivot point value:
- Support (S2)= P − (H − L)
Lastly, we subtract another trading range for the next lower level (S3).
Woodie pivot point
A Woodie pivot points indicator uses the same logic as the floor pivot point. But, its calculation tends to emphasize the close price.
1. P in woodie pivot points
Woodie computation is comparable to that of the floor pivot point. But, it gives more weight to the closing price:
Pivot Point (Woodie P) = [High + Low + (Close x 2)] / 4
2. R1 R2 R3 in woodie PP
- R1 = 2 x P – LOW
- R2 = P + RANGE
- R3 = Resistance 2 + RANGE = P + RANGE x 2
3. S1 S2 S3 in woodie PP
- S1 = 2 x P – HIGH
- S2 = P – RANGE
- S3 = Support 2 – RANGE = P – RANGE x 2
Camarilla pivot point
A Camarilla pivot point equation is an extension of the existing classic (floor) equation. In fact, This pivot points indicator was developed by the flourishing bond trader Nick Stott.
1. P in camarilla PP
Camarilla calculation is similar to that of the standard pivot point:
Pivot Point (Camarilla P) = (High + Low + Close) / 3
2. R1 R2 R3 R4 in camarilla PP
- R1 = [Close + RANGE x 1.1/12]
- R2 = [Close + RANGE x 1.1/6]
- R3 = [Close + RANGE x 1.1/4]
- R4 = [Close + RANGE x 1.1/2]
3. S1 S2 S3 S4 in camarilla PP
- S1 = [Close – RANGE x 1.1/12]
- S2 = [Close – RANGE x 1.1/6]
- S3 = [Close – RANGE x 1.1/4]
- S4 = [Close – RANGE x 1.1/2]
Demark pivot point
A Demark Pivots point was founded by Tom Demark, a renowned trader, and technical analyst. Also, its calculation is very strange from other Pivot Points’ types. To clarify, it starts with a different base and diverges from the previous pivot point calculations.
How to trade with pivot points Indicator?
We discussed the basics of pivot points earlier, now we will learn how we can trade with this forex indicator. However, to trade with the pivot points strategy, we have two main techniques that you need to know: trading reverses and trading breakouts.
Trading trend reverses
This pivot trading approach seeks to exchange near the pivot, support, or resistance levels. That is why stock traders consider the MT4 Pivot points indicator as a pivot reversion approach.
1. Trading bullish reverses
On the one hand, if the price is approaching support levels such as S1, S2, or S3, a probable upward movement is normally predicted in MT5. To clarify, when the price gets close to these support levels, the price tends to experience a bullish reversion in MT4.
2. Trading bearish reversions
On the other hand, if the price is approaching resistance levels such as R1, R2, or R3, a probable downward movement is usually anticipated. To explain, when the price gets close to these resistance levels, the tends to experience a bearish reversion in MT5 chart.
Trading breakouts with pivot points indicator
This pivot point approach aims to exchange fast-moving trade breakouts when price cuts pivot, support, or resistance levels. Because when the price breaks these levels, it just proves that the price is highly expected to trend towards the next levels. That is why cryptocurrency traders consider the Pivot points Tradingview indicator as a pivot breakout approach.
1. Trading breakups
When the price breaks up the resistance level, that level does not hold anymore. To clarify, crypto traders will focus on buying with the breakout of the resistance. Moreover, they will focus on the next upper level of the Tradingview pivot point indicator.
2. Trading breakdowns
When the price breaks down the support level, that level does not persist anymore. To explain, coins traders will focus on shorting with the breakout of the resistance. In addition, they will focus on the next lower level of the MT4 pivot point indicator.
Download Pivot points indicator for MT4
Pivot point indicator for MT4 is a technical tool that detects the pivot point in order to project potential support and resistance levels below and above it. When the price is exchanging above the calculated pivot, this may indicate a bullish move. In contrast, when the price is exchanging below the calculated pivot, this may indicate a bearish direction.
To explain, here is a graph that represents the MetaTrader 4 pivot points indicator.
Download Pivot points indicator for MT5
Pivot point indicator for MT5 is a technical tool that outlines the Pivot Point in order to forecast potential support and resistance levels under and over it. If the price is trading beyond the calculated pivot, this may recommend initiating long positions. In contrast, if the price is trading inferior to the calculated pivot, this may recommend opening short positions in MetaTrader 5.
To clarify, you can look at the pic below which show the MT5 PP indicator.
Download Pivot points indicator for TradingView
Pivot Points indicator for Tradingview is highly used in Forex Trading. The principal benefit of the pivot point is its ability to ensure objective estimations. Instead of subjective drawings and plotting, done manually. Exchanging over that point may designate a continuing bullish viewpoint. In contrast, trading under that point may indicate an ongoing bearish emotion.
The picture below represents the Pivot Point Indicator Tradingview.
Pivot points MT4 indicator is a useful and helpful indicator also in MT5. In fact, it provides a trend indication. From one part, if the price is above the pivot point, a bullish indication is recognized by CFDs traders. From another part, if the price is below the pivot point, a bearish indication is perceived by Tradingview chartists.
- Technical analysts use the MT5 pivot point indicator in order to identify directions, trend reverses, and trend breakouts.
- Traders consider pivot points with as a Tradingview indicator in order to forecast their associated forex pivot levels at which the trend could reverse similar to the Fractals. But, it could also persist.
- If the direction reverses, we talk about a pivot reverse strategy in the MT4 chart.
- When the direction persists, we talk about a pivot breakout strategy.