what is pivot point

A pivot point is a technical analysis indicator used by traders in financial markets to determine the overall trend of the market over different time frames. It is a price level that is calculated as an average of significant prices from the performance of a market in the prior trading period. Pivot points are based on the high, low, and closing prices of previous trading sessions, and theyre used to predict support and resistance levels in the current or upcoming session. The pivot point itself is simply the average of the high, low, and closing prices from the previous trading day. Pivot points and the associated support and resistance levels are often turning points for the direction of price movement in a market. In an up-trending market, the pivot point and the resistance levels may represent a ceiling level in price above which the uptrend is no longer sustainable and a reversal may occur. In a declining market, a pivot point and the support levels may represent a low price level of stability or a resistance to further decline. Pivot points are especially useful to short-term traders who are looking to take advantage of small price movements. They can be used to determine levels of entry, stops, and profit-taking.