| Pivot Points are used to help a forex trader | | | | If the market is bearish, a drop below the pivot |
| calculate Support and Resistance levels. | | | | point leads to the first Resistance point. This |
| The Support level is defined as the price level at | | | | represents the strike price for projected profits. |
| which intensive buying will probably lead to the | | | | If the first Support point loses ground so the |
| price decreasing - it indicates an imminent | | | | currency pair continues to decline, the second |
| down-trend. | | | | Support point represents another target. |
| The Resistance level can be defined as the price | | | | If the market is bullish, a market price rising |
| level at which intensive selling would probably lead | | | | above the pivot point leads to the first Resistance |
| to the price increasing - indicating an imminent | | | | point. This represents the strike price for |
| up-trend. | | | | projected profits. If the price continues to rise, |
| So this means Support and Resistance levels are | | | | the second Resistance point would represent a |
| quite useful cues to indicate when a trade should | | | | second target. |
| be executed. | | | | As soon as a Resistance or Support point is |
| If a currency is traded above the pivot point, this | | | | breached its role becomes the opposite - this |
| is referred to as the purchase zone (long). If a | | | | means that a breached Resistance point becomes |
| currency is traded below the pivot point, this is | | | | a Support point and vice versa. |
| referred to as the sell zone (short). | | | | |