Pivot Levels means in Arabic: “مستويات المحور”, and it is a powerful technical analysis tool used by traders to identify expected support and resistance areas during the day or week.
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First: Which candle do we rely on?
To calculate the Pivot, we need 3 numbers from a previous candle (usually the candle from the day before):
• Highest Price (High)
• Lowest Price (Low)
• Closing Price (Close)
Example:
• High = 1.2000
• Low = 1.1500
• Close = 1.1800
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Second: How do we calculate the levels?
1. The basic pivot point (PP):
PP = (High + Low + Close) ÷ 3
PP = (1.2000 + 1.1500 + 1.1800) ÷ 3 = 1.1766
2. First support (S1) and first resistance (R1):
• R1 = (2 × PP) - Low
• S1 = (2 × PP) - High
R1 = (2 × 1.1766) - 1.1500 = 1.2032
S1 = (2 × 1.1766) - 1.2000 = 1.1532
3. Second support (S2) and second resistance (R2):
• R2 = PP + (High - Low)
• S2 = PP - (High - Low)
R2 = 1.1766 + (1.2000 - 1.1500) = 1.2266
S2 = 1.1766 - (1.2000 - 1.1500) = 1.1266
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Third: The importance of Pivot levels
• If the price opens above the PP point and starts to rise = the market is likely bullish.
• If the price is below the PP point = there is a chance to see a drop.
• Resistances (R1, R2) can be targets for profit-taking or sell points.
• Supports (S1, S2) can be used for entering buy positions or as stop-loss.
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Fourth: How do I use it on the chart?
1. Open your currency chart on a 1H or 15-minute timeframe.
2. Activate the Pivot tool from the platform (like TradingView).
3. Monitor how the price behaves around PP, R1, and S1 levels.
Practical Example:
• If the price opened today above PP and broke R1 = buy entry signal.
• If the price breaks S1 with a strong candle = you might enter a sell (Short).
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Golden advice:
Use Pivot with other tools like RSI or reversal candles to strengthen your decision and reduce false signals.
