Understanding Forex pivot points

When trading, there are different indicators that can be used in order to facilitate the trading process and also used to provide a guide for a strategy or a plan. One of these methods is Forex pivot points.

Some traders use pivot points in their trading strategy,  so they make the calculation every day before starting to trade each morning; those Forex pivot points are calculated from midnight to midnight EST time.

There some different methods to calculate pivot points: Standard forex pivot points, Camarilla, Fibonacci pivot points, Woodies and DeMarks pivot points.

There are 3 variables to take into account when calculating pivot points: The highest price (H), the lowest price (L) and the close price (C).
The formula to calculate Standard pivot points is the following:
Pivot: (H + L + C)/3
To calculate the supports and resistances are: (supports are the lower prices that a currency might reach before they start increasing in value and resistances are the highest prices that a currency might reach before they start decreasing in value)



R1 = ( 2 x Pivot ) – L        

S1 = ( 2 x Pivot ) – H

R2 = Pivot + ( H – L )       

S2 = Pivot – ( H – L )

R3 = H + 2( Pivot – L )

S3 = L – 2( H – Pivot

One interesting method for calculate Forex pivot points are Fibonacci levels. 
The first step is to calculate the pivot point with the standard method and then use the retracements to calculate the levels. Most traders use: 38.2%, 61.8% and 100% retracements.
The last step is to add or subtract the retracements from the pivot point to find the resistances and supports.  
Pivot = (H + B + C) / 3



 R1 = Pivot + 0382 x (H – L) 

S1 = Pivot – 0382 x (H – L)

 R2 = Pivot + 0618 x (H – L)

 S2 = Pivot – 0618 x (H – L)

R3 = Pivot + 1.000 x (H – L)

S3 = Pivot – 1,000 x (H – L)

The good news for traders is that Tradeviewforex.com offers different pivot points calculators that will reduce the beginning time for trading, with accurate data of main currency pairs.