Pivot Points

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Pivot Points offer chartists a methodology to determine price direction and then set support and resistance levels. Price direction is determined by looking at the current period's price action relative to the pivot point: starting above or below the pivot point, or crossing it in either direction during trading. The set support and resistance points come into play after price direction has been determined. While originally designed for floor traders, the concepts behind Pivot Points can be applied across various timeframes.

 As with all indicators, it is important to confirm Pivot Point signals with other aspects of technical analysis. A bearish candlestick reversal pattern could confirm a reversal at second resistance. Oversold RSI could confirm oversold conditions at second support. An upturn in MACD could be used to confirm a successful support test.

On a final note, sometimes the second or third support/resistance levels are not seen on the chart. This is simply because their levels exceed the price scale on the right. In other words, they are off the chart.

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