Traders need to learn that the more trading information they learn is that while indicators and oscillators can help in making good trades, they can’t be used as primary decision making tools but help in the trading process. These tools don’t know anything about supply and demand areas on your charts. However they do up the chances of making a good trade. They are mathematically generated lines on your chart. The math is always correct. Thus that leads to profits or losses in your trading account is the question most new traders need to think about.
The support and resistance of pivot points may help to identify or even strengthen supply and demand zones found in your charts. The pivot point itself is simply the previous day’s high + the previous day’s low + the previous day’s close divided by three. This pivot point can act as a support or resistance level for price and can be applied to equities. This time is figured at the five pm closing of the exchange.
By using this pivot point number and some additional mathematical calculations, we can derive several additional support and resistance numbers. In fact, there are calculations for four support and resistance levels. We can use these pivot support and resistance as possible entry and target points for trading.Although the main use for the pivot points is intraday charting, you could plug in the weekly or even the monthly high, low, and close to determine the future support and resistance for swing and position trading.
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