Pivot Points are used by traders as a technical analysis indicator to calculate the overall trend of the market. It covers the average of the day’s highs and lows along with the closing of the previous day.
Pivot Points are important to help determine the direction of the market, if the market trades above the pivot point, it indicates that the market is bullish. if the market trades below the pivot point, it indicates that the market is bearish.
Pivot Points follow a five point system namely, Pivot Point, Support 1, Support 2, Resistance 2 and resistance 2.
This is an important tool to help the trader gauge the right entry and exit points in the market.