A pivot point is a turning point or condition in a trend in financial transactions, and this concept also applies.
The pivot point indicates the level at which the MARKET TREND changes from “bull” to “BEAR” and vice versa.
So a pivot point is what we call a turning point in a trend.
Its appearance suggests a reversal of trend.
In general, if the market trend breaks the trading pivot point, the view is that it is a bull market and will continue to rise. On the other hand, if the market breaks this level, the view is that it is a bear market and expects to continue falling.
And at this level, FX markets are expected to have some support/resistance, and if prices fail to break this pivot point, a rally from here is justified.
Traders can use pivot points as a simple trend analysis tool.
Forex pivots use prices that are easy to calculate and have been a favorite rough reference for floor traders and institutional forex traders for many years, so they should not be ignored for learning.
Simply put, pivot points use the highs, lows and closing prices of the previous session to calculate five potential intraday support or resistance to market activity for the current session.
Assuming you know the highs, lows and closing prices of the previous trading day, you can calculate the above five prices.