Pivot Points Indices Technical Analysis & Pivot Points Trading Signals
This stock indices indicator consists of a central pivot which is surrounded by 3 resistance levels below and 3 support levels above.
Initially these points were used by floor traders to analyze & trade the equities & futures stock indices markets. This stock indices technical indicator is considered to be leading rather than lagging.
Pivots provide a quick way for stock indices traders to analyze the general indices trend of how the stock indices trading market is going to be moving during the course of the day. A few simple calculations are used to plot the resistance and support levels.
To calculate these points for the coming trading day is the previous day's
- high,
- low, and
- close indices prices are used
The stock indices trading day closes & this daily closing time is when the indicator is updated.
The 24-hour cycle for this indicator are calculated using a complex formula. The central pivot is then used to calculate the support & resistance levels as follows:
Resistance 3
Resistance 2
Resistance 1
Pivot Point
Support 1
Support 2
Support 3
Indices Technical Analysis & Generating Trading Signals
This stock indices indicator can be used in different ways to generate trading signals. The following methods are the most common technical analysis:
Indices Trend Identification Signals
The central pivot is used by stock indices traders to determine the general market indices trend direction. The trades taken will only be in direction of the market trend.
- Buy signal - stock indices trading price is above the central point
- Sell signal - stock indices trading price is below the central point
Indices Price Break-out Signals
Indices Price break out trading signals are generated as follows
- Buy signal- is generated when the stock indices trading price breaks upwards through the central point.
- Sell signal- is generated when the stock indices trading price breaks-out downwards through the central point.
Indices Price Breakout
Indices Price Reversal Trading Signal
Indices Price reversals are generated as follows
Buy Trading Signal- when stock indices trading price moves down towards one of the support area, then touches the support or moves slightly through it then quickly reverses and moves upwards.
Sell Trading Signal- when stock indices trading price moves up towards one of the resistance level, then touches the resistance or moves slightly through it then quickly reverses and moves downwards.
Indices Price Reversal Trading Signal
Setting Stop-loss & Limit Profit Values
The central pivot and the other support and resistance levels are used by stock indices traders to determine suitable stop loss and limit profit levels.
Setting Stop-loss & Limit Profit
If a buy is placed above the central point the Resistance 1 or Resistance 2 can be used to set the take profit level, and the Support 1 can be set as a StopLoss Indices Order Level for the trade.
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 this site.
