Indices Trading Pivot Points

Pivot points is a set of indicators created by floor traders in the commodities markets to ascertain potential turning points, also known as 'pivots'. These points are calculated to determine levels in which the sentiment of the indices trend could change from 'bullish' to 'bearish.' Indices traders use these points as markers of support & resistance.

These points are calculated as the average of the high, low and close from the previous session:

Indices Pivot Point = (High + Low + Close) / 3

Day traders use the calculated pivot-points to determine levels of entry, stops and profit taking, by trying to determine where the majority of other indices traders may be doing the same.

A pivot-point is a indices trading price level of significance in technical analysis of a financial market that is used by traders as a predictive indicator of stock indices trading price movement. It's calculated as an average of significant indices trading prices (high, low and close) from the performance of a market in the prior trading period. If the indices trading prices in the following period trades above the central point it is usually evaluated as a bullish sentiment, whereas if stock indices trading price below central point is seen as bearish.

The central point is used to calculate additional levels of support & resistance, below and above central point, respectively, by either subtracting or adding stock indices trading price differentials calculated from previous trading ranges.

A pivot-point & the associated support & resistance levels are often turning points for the direction of stock indices trading price movement in a market.

• In an up indices trend, the pivot point & the resistance levels may represent a ceiling level for the indices trading price. If stock indices trading price goes above this level the up indices trend is no longer sustainable and a indices trend reversal may occur.

• In a down indices trend , a pivot point & the support levels may represent a low for stock indices trading price level or a resistance to further decline.

The central pivot-point can then be used to calculate the support & resistance levels as follows:

Pivot points consist of a central point level surrounded by three support levels below it and three resistance areas above it. These points were originally used by floor traders on equity and futures exchanges because they provided a quick way for those traders to get a general idea of how the stock indices trading market was moving during the course of the day using only a few simple calculations. However, over time they have also proved exceptionally useful in other markets as well.

One of the reasons they are now so popular is because they are considered a 'leading' (or predictive) technical indicator rather than a lagging indicator. All that is required to calculate the pivot points for the upcoming (current) day is the previous day high, low, and close indices trading prices. The 24-hour cycle pivot points in this indicator are calculated according to the following formulas:

The central pivot can then be used to calculate the support & resistance levels as follows:

Resistance 3

Resistance 2

Resistance 1

Pivot Point

Support 1

Support 2

Support 3

Pivot Points Support & Resistance Levels

Pivot Points as a Indices Trading tool

The pivot point itself represents a level of highest resistance or support, depending on the overall sentiment. If the stock indices trading market is direction-less ( range bound ) indices trading prices will often fluctuate greatly around this level until a indices trading price breakout develops. Indices Prices above or below the central point indicates the overall sentiment as bullish or bearish respectively. This stock indices indicator is a leading Stock Indices indicator that provides signals of potentially new highs or lows within a given chart timeframe.

The support and resistance levels calculated from the central pivot point & the previous market width may be used as exit points of the open Indices trades, but are rarely used as entry signals. For examples, if the stock indices trading price is up-trending and breaks through the pivot point, the first or second resistance level is often a good target to close a position, as the probability of resistance and reversal increases greatly, with every resistance level.

In pivot point analysis 3 levels are oftenly recognized above & below the central point. These are calculated from the range of stock indices price movement in previous trading period and then added to the central point for resistances & subtracted from it for support areas.

Pivot Points

Pivot levels can be used in many different ways. Here are a few of the most common techniques for utilizing them:

Indices Trend Direction: Combined with other Indices analysis techniques such as overbought/oversold oscillators, volatility measurements, etc., the central point may be useful in determining the general trending direction of the market. Trades are only taken in direction of the Indices trend. Buy trades occur only when the stock indices trading price is above the central point and sell stock indices trades occur only when the stock indices trading price is below the central pivot.

Indices Price Breakouts: In stock indices trading price breakouts, a bullish buy stock indices signal occurs when the stock indices trading price breaks up through the central point or one of the resistance levels (typically Resistance 1). A short sell stock indices signal occurs when stock indices trading price breaks down through the central point or one of the support levels (typically Support 1).

Indices Trend Reversals: In indices trend reversals, a buy stock indices signal occurs when the stock indices trading price moves towards a support level, gets very close to it, touches it, or moves only slightly through it, and then reverses and starts moving in the other direction.

To download Pivot points:

https://c.mql5.com/21/9/pro4x_pivot_lines.mq4

Once you download it open it with MQL4 Language Meta Editor, Then Compile the technical indicator by pressing the Compile Button and it will be added to your MetaTrader 4.

NB: Once you add it to your MetaTrader 4, the technical indicator has additional lines named Mid-Points, to remove the additional lines open MQL4 Meta Editor(shortcut keyboard key - press F4), and change line 16 from:

Extern bool midpivots = true:

To

Extern bool midpivots = false:

Then Press Compile button again, and it will then appear as exactly illustrated on www.tradestockindices.com website.