How to calculate forex pivot points

Pivot points were originally developed by floor traders in the equity and commodity exchanges. They are calculated based on the high, low and closing prices of previous trading sessions, and are used by traders to predict support and resistance levels in the current or upcoming session. These support and resistance levels can be used by traders to determine entry and exit points - both for stop losses and profit taking.

Because the forex currency trading market is so large and liquid, pivot points - which thrive in this type of market - are very useful. The large size of the market, especially in liquid currency pairs such as the EUR/USD, helps prevent market manipulation that would keep the market from adhering to technical principles like support and resistance.

For calculation of Pivot Points you require the Open, Close, Highest and Lowest values of the previous trading sessions
Pivot Point Calculator

Here is a Pivot Point Calculator.



Pivot point calculators are a valuable tool, but as the formula is actually quite simple, so you can also calculate it yourself. The pivot point for the current trading session is calculated as:

Pivot Point = (Previous High + Previous Low + Previous Close) / 3

The pivot point can then be used to determine levels of estimated support and resistance levels for the day:

Resistance Level 1 = (2 * Pivot Point) - Previous Low Support Level 1 = (2 * Pivot Point) - Previous High Resistance Level 2 = (Pivot Point - Support Level 1) + Resistance Level 1 Support Level 2 = Pivot Point - (Resistance Level 1 - Support Level 1) Resistance Level 3 = (Pivot Point - Support Level 2) + Resistance Level 2 Support Level 3 = Pivot Point - (Resistance Level 2 - Support Level 2)

Forex Day Trading
Because the forex market is a 24-hour market, there is often confusion about what time of day to use when calculating the closing price of one trading session and the opening of another. The generally accepted times used when calculating pivot points is 23:59 GMT for the close of a trading session, and 00:00 GMT for the opening of the new session.

The forex day trader can use daily data to calculate pivot points and support and resistance for the upcoming trading day. Weekly, swing forex currency traders can use weekly data to calculate pivot points and support and resistance for the upcoming trading week. Longer term forex currency traders can use monthly, yearly, or even longer time frames when calculating pivot points and support and resistance levels on their charts. Calculations can be done quickly and easily on free forex pivot point calculators across the internet, or by hand using the simple equations noted above.