Pivot Points Analysis & Pivot Points Trading Signals

This indicator consists of a central pivot which is surrounded by 3 resistance levels below & 3 support levels above.

Initially these points were used by floor traders to analyze & trade the equities & futures markets. This indicator is considered to be leading rather than lagging.

Pivots provide a quick way for traders to analyze the general trend of how the market is going to be moving during the course of the day. A few simple calculations are used to draw the resistance and support levels.

To calculate these points for the coming day is the previous day's

• high,
• low, and
• close prices are used

The 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. Central pivot is then used to calculate support and resistance levels as follows:

Resistance 3

Resistance 2

Resistance 1

Pivot Point

Support 1

Support 2

Support 3

Trading Analysis & Generating Trading Signals

This indicator can be used in different ways to generate signals. Following methods are the most common technical analysis:

Stock Trend Identification Trading Signals

The central pivot is used by traders to determine the general market trend direction. Trades taken will only be in direction of the market trend.

• Buy signal - price is above central pivots point
• Sell signal - price is below central pivots point

Stock Trading Price Break out Signals

Stock Price breakout signals are generated as follows

• Buy signal- is generated when the price breaks upwards through the central point.
• Sell signal- is generated when the price breaks-out downward through the central point.

Stock Price Break Out

Stock Price Reversal Signal

Stock Price reversals are generated as follows

Buy Trading Signal- when 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 Signal- when price moves up towards one of the resistance level, then touches the resistance or moves slightly through it then quickly reverses and moves downwards.

Stock Price Reversal Signal

Setting Stop loss & Limit Profit Values

The central pivot and the other support and resistance levels are used by traders to determine suitable stop loss and limit profit levels.

Setting Stop loss and 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 Order Level for the trade.

To download this Pivot points Indicator:

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

Once you download it open it with MQL4 Language Editor, Then Compile it by pressing the Compile Button Key and it will be added to your MT4.

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

Extern bool mid-pivots = true:

To

Extern bool mid-pivots = false:

Then Press the Compile button again, & it will then appear as is exactly shown on this site.