Tips For Forex Pivot Point Trading

Posted by Nick Niesen on October 29th, 2010

Forex pivot point trading is an easy way for traders to utilize the pivot points and predict what is possible in the market. There are some easy to use, follow, and remember tips that will help any Forex market investor use pivot points and the associated support and resistance levels to minimize their risks.

If the price is at the pivot point, a move back to the resistance one or support one level is very possible. If the price is at the resistance one level, you can expect to see a move to the resistance two level or a move back towards the pivot point. If the price of the currency is at the support one levels, expect it to move towards the support two level or to go back towards the pivot point level. If the price is at resistance two levels then it can be expected to move towards the resistance three levels or back towards the resistance one level. If the price is at the support two level, you can expect it to move towards the support three level or a move back towards the support one level.

Any news that is a significant influence to the market will have an effect on prices. If there is no news at all that has a significant influence on the market, the price will generally move from the pivot point to either support or resistance level one. If there is any significant news which has an influence on the market, then market price may go right through the resistance one or support one level, and reach level two, or even three, of the support or resistance levels. Resistance level three and support level three are used by Forex market traders as a general indication of the maximum range for days that are extremely violatile but may occasionally be exceeded. Pivot points work excellently in sideways markets because prices will usually range between the resistance level one and the support level one price fluctuation. In a very strong Forex market trend, the price may blow right through a pivot line and keep moving.

The pivot point is a very important tool used by Forex market traders to analyze market fluctuations. The pivot point is the first place an investor usually enters a trade, because the pivot point is the primary support and resistance level and the biggest price movements generally occur at the pivot point price. By following the tips above, pivot point trading on the Forex market will help a trader anticipate market trends and minimize the risk.

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