Pivot points in forex trading are turning points where a particular currency turns from trading up to trading down in value. It should be obvious straight away that if you can predict where a pivot point will occur, you will make money from the prediction!

The use of pivot points was developed by floor traders to give visibility as to where the price of a currency is relative to previous market action. The pivot point is a level in which the sentiment of the market changes from “bull” to “bear”, or vice versa.

If the market sends this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at the pivot point level, the market is expected to have some kind of support or resistance, and if price can’t break the pivot point, a possible bounce from it is likely.

Lets go through that again.  The pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa. Every experienced trader knows that the pivot point is an important measure of strength and weakness of a currency. There are several ways to calculate the likely pivot point for a currency pair. Its these calculations and mathematical formulas that form the basis of most forex signals software packages.

Pivot points are a crucial element in forex price charts and mapping. Accurate prediction of pivot points will lead to successful trend predictions and profitable trades.

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