Pivot points are another tool or indicator that can be used to help in trading. They are used to predict potential levels of support or resistance. As with all indicators, it’s best to use along with other indications to give a better idea of how we should interpret what is likely to happen.
With the IBFX trading platform, pivot points can be accessed from the Custom Indicators list in the Navigator window. There are 2 choices for pivot points. One is IBFX – DailyPivots and the other is IBFX – WeeklyPivots. The daily is calculated based on the prior day according to Greenwich Time. (Sunday is not counted as a day.) The weekly is calculated based on the prior week.
When you pull the indicator on to the chart, it identifies the pivot point or starting point from which potential support or resistance levels are identified. It also lists 3 additional, potential support and resistance levels identified as S1 and R1, S2 and R2, S3 and R3 as you move farther away from the pivot point. They are identified in a legend and also with lines drawn on the chart. Remember these points are identified as potential levels of support or resistance, so we can be aware of these levels as they are approached.
When using pivot points, prices tend to move within 2 pivot lines acting as support and resistance. If prices break to a new level, then look for prices to now move within the next level between the 2 pivot lines. With any indicators, any major news announcements are not expected to follow typical rules. Pivot points seem to work best when in sideways markets or moderate trends.
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