Gold Pivot Points

Pivot points is a set of indicators developed 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 trend could change from 'bullish' to 'bearish.' traders use these points as markers of support and resistance.

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

XAU/USD Pivot Point = (High + Low + Close) / 3

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

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

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

A pivot & the associated support & resistance zones are often turning points for the direction of price movement in a market.

In an up-trend, the pivot-point & the resistance zones may represent a ceiling level for the gold price. If price goes above this level the up trend is no longer sustainable & a trend reversal may occur.

In a down-trend, a pivot-point & the support levels may represent a low for xauusd price level or a resistance to further decline.

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

Pivot points consist of a central point level surrounded by three support levels below it and three resistance zones 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 gold market was heading during the course of the day using a few calculations. However, over time they've also proved exceptionally helpful and useful in other trading markets as well.

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

Central pivot can then be used to calculate the support and resistance levels as follows:

Resistance 3

Resistance 2

Resistance 1

Pivot Point

Support 1

Support 2

Support 3

XAUUSD Pivot Points Support & Resistance Levels - Pivot Points Analysis Strategy Method

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The pivot point line itself represents a level of highest resistance or support, depending on the over-all sentiment. If the gold market is direction-less ( range bound ) prices will often fluctuate greatly around this level until a xauusd price breakout develops. Prices above or below the central point indicates the overall sentiment as bullish or bearish respectively. This indicator is a leading indicator which provides market 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 trade transactions, but are rarely used as entry signals. For examples, if the gold price is up-trending & breaks through the pivot point, the first or second resistance zone is often a good target to close a trade, as the probability of resistance and reversal increases greatly, with every resistance zone.

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

Pivot Points

Pivot levels can be used in many various ways. Here are a couple of the most commonly techniques/methods for utilizing them:

XAU/USD Trend Direction: Combined with other analysis techniques/methods like overbought oversold oscillators, volatility measurements, etc., the central point may be helpful in determining/figuring out the overall trending market direction of the price. Trade Positions are only opened in the direction of the market trend. Buy trade transactions occur only when the price is above the central point & sell xauusd trades occur only when the price is below the center pivot point.

Gold Price Breakouts: In xauusd gold price breakouts, a bullish buy signal occurs and happens when price breaks out up through the center point or one of the resistance zones (generally Resistance Area 1). A short sell signal occurs and happens when the price breaks out downwards through the center point or one of the support levels (mostly Support Zone 1).

Gold Trend Reversals: In trend reversals, a buy signal occurs and happens when the price moves towards a support level, gets very near to this point, touches it, or only moves slightly/a little through this level, and then reverses and starts heading and moving in the other direction.

To download Pivot Points Leves Indicator:

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

Once you download it. Open it with the MQ4 Language MetaEditor, Then Compile the indicator by pressing the Compile Button and it'll be added to your MT4.

NB: Once you as a trader add it to your MT4 Platform/Software, indicator has additional lines named and marked Mid Points, to remove the extra lines open MQL4 Language Meta-Editor(shortcut keyboard key - press F4), and change line 16 from:

Extern bool mid-pivots = true:

Extern bool mid-pivots = false:

Then Click Compile button again, & it will then appear and be shown as depicted on www.tradegoldtrading.com web site.

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