Identify balance levels, support and resistance through pure mathematics.
Pivot Points are among the most reliable mathematical tools in professional trading. Using the previous session's High, Low and Close, they help traders identify balance levels in the market and project potential zones of support and resistance. They offer an unbiased reference to determine whether the current market sentiment is bullish, bearish, or neutral.
Pivot Points represent the balance between buying and selling pressure. When the market trades above the Pivot, it signals bullish momentum; when below, it indicates bearish sentiment. Professional traders use these fixed levels to plan trades precisely, identify reversal zones and structure entry or exit levels based on mathematics rather than emotion.
The central pivot point is calculated by averaging the previous session’s prices:
Pivot Point (P) = (High + Low + Close) ÷ 3
First Resistance (R1) = (2 x Pivot) - Low
First Support (S1) = (2 x Pivot) - High
Second Resistance (R2) = Pivot + (High - Low)
Second Support (S2) = Pivot - (High - Low)
These levels help identify potential price reactions and momentum shifts.
Assume Gold (XAUUSD) is currently trading near 4,253.98 USD per ounce. In the previous trading session:
High = 4,280 Low = 4,200 Close = 4,240
Pivot Point (P) = (4,280 + 4,200 + 4,240) ÷ 3 = 4,240
First Resistance (R1) = (2 x 4,240) - 4,200 = 4,280
First Support (S1) = (2 x 4,240) - 4,280 = 4,200
Second Resistance (R2) = 4,240 + (4,280 - 4,200) = 4,320
Second Support (S2) = 4,240 - (4,280 - 4,200) = 4,160
Trading above 4,240 USD reflects bullish strength with possible targets near 4,280 or 4,320, while trading below suggests a bearish tone with support around 4,200 or 4,160.
Unlike moving averages that change with every price tick, Pivot Points remain constant throughout the trading session. This consistency helps traders maintain discipline, manage emotions and plan strategies effectively.
When combined with tools such as RSI, MACD, or volume analysis, Pivot Points provide a structured framework that turns mathematics into confident, actionable trading decisions.
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