What is a pivot point indicator?

Pivot point indicators give traders a means of determining the direction of the price and then place support and resistance levels. Price direction is estimated by observing the price action of the current period relative to the pivot point. Start above or below the pivot point, or cross it in either direction during trading.

How are pivot point lows determined?

Pivot Point Lows are determined by thenumber of bars with higher lows on either side of a Pivot Point Low. For example, a Pivot Point High, with a period of 5, requires a minimum of 11 bars to be considered a valid Pivot Point. A minimum of 5 bars before and after the Pivot Point High all have to have lower highs.

How do you use pivot points?

Pivot points can be used in two ways. The first way is to determine the overall market trend. If the pivot point price is broken in an upward movement, then the market is bullish. If the price drops through the pivot point, then it's is bearish. 3 The second method is to use pivot point price levels to enter and exit the markets.

How to calculate pivot point levels in stock market?

The pivot point levels can be calculated from the previous period data and they can be usually plotted on charts as horizontal lines. There is a centerline called pivot line (PP) which acts as an equilibrium point. Stock is usually bullish above pivot point and bearish below pivot point.