In forex trading Daily Pivot point is one of the most used indicators on forex charts. This important level we can describe as :
Pivot = (High + Low + Close) / 3
where is :
High – the highest yesterday price level
Low – the lowest yesterday price level
Close – daily close or midnight price level
Pivot range or pivot zone is price range which we can calculate using this formulas :
Pivot2 = (High + Low) / 2
Difference = |Pivot – Pivot2|
Pivot High = Pivot + Difference
Pivot Low = Pivot – Difference
Pivot High to Pivot Low is the Pivot Zone
Example :
Pivot = (High + Low + Close) / 3 =(1.31 + 1.3 + 1.308)/3=1,306
Pivot2 = (High + Low) / 2 = 1,305
Difference = |Pivot – Pivot2| = 1,306-1,305=10 pips
Pivot High = Pivot + Difference = 1,306+10 pips = 1.307
Pivot Low = Pivot – Difference = 1,306 – 10 pips = 1,305
Pivot zone is from 1.305 till 1.307
Possibile scenario:
If we have strong bullish or bearish trend afther correction and pullback price will touch Pivot range (Pivot zone) and create support (for bullish trend) or resistance (bearish trend) and than again price will go in trend direction.
Free download Pivot range indicator :
Pivot Zone indicator mql4