Forex support and resistance levels are the basic levels that technical traders need to know.
These levels are important, but technical traders, especially novices, often find it difficult to place them.
The Daily Pivot Indicator solves the problem of accurately placing key support or resistance levels.
MT4’s Daily Pivot Point Indicator indicates the levels at which price reversals are likely to occur.
The chart of the Daily Pivot Point Indicator has 13 levels. These levels can be seen in the chart below.
The levels on the chart are potential support and resistance levels that can be used to limit price action.
Below is the chart showing these levels.
The chart shows the R1, R2, R3 and R3 levels.
The S1, S2 and S3 support levels are the first, second and third levels respectively.
The pivot point line is PP (yellow horizontal line) and is visible between the resistance and support zones.
The Daily Pivot Point Indicator plots midpoints between pivot points, support and resistance zones.
The opening and closing of the previous trading session is used to calculate the Daily Pivot Point Indicator.
Pivot Point (PP) = (Close + High + Low)/3.
From the pivot points, other support and resistance levels can be calculated.
First resistance (R1) = (2XPP) – low
Second resistance level (R2) = (high – low) PP +
Third resistance level (R3) = high + 2, (PP – low)
First support (S1) = (2XPP) – high.
Second support (S2) = (High – Low).
Third Support (S3) = Low to Moderate – 2 (High to Moderate – PP).
The advantage of MT4’s Daily Pivot Point indicator is that it assists technical traders in placing support and resistance zones.
The indicator is objective, unlike other subjective indicators. All traders use the same method to calculate it.
This indicator is especially useful for intraday traders who can take advantage of small price fluctuations.
This indicator is also used by market makers and Forex experts to spot potential reversals.
How to use the Daily Pivot Point Indicator
Both breakout traders and range traders can use MT4’s Daily Pivot Point indicator.
Range traders can use this indicator to identify reversal levels and then place buy or sell orders.
The S1, S2 & S3 levels are trading support and resistance levels. the R1, R2 & R3 levels are potential sell levels.
Breakout traders can use this to identify key areas that need to be broken before placing a trade.
A breakout of R1, R2 or R3 signals a bullish market with strong buying momentum.
This is when a buy order can be placed following a breakout above these levels.
Thus, a breakout of S1, S2 or S3 signals a bearish market with strong selling pressure.
Sell orders can be placed after a breakout at any level.
The daily pivot points can be used to place buy and sell orders, as well as to select take profit or stop loss levels.
The Daily Pivot Point indicator MT4 assists traders in identifying reversal points and where to place trades. The indicator can be used in combination with other indicators such as RSI, MACD, etc. The indicator can be used to determine the take profit or stop loss level in a trade.