# What is Pivot Points indicator (Trading Strategy)

In a Simple word, pivot points (PP) indicator shows you, multiple support and resistance level. so you can buy in the support at level, and sell at the resistance level.

This indicator measures by high low and closing price, and plot 3 lines above the pivot line( center line) and below the center line. above the center line is a bullish zone and below the center line is the bearish zone.

For short time trading you can use the

## Pivot points indicator setting

• Type: two types available, standard, and Fibonacci. my recommendation is to use the default standard type.
• Continuous: By default its unchecked. my recommendation is also to uncheck this.
• Shading: if you check this option, color shading will highlight the levels. you can check this option for a better view. or uncheck if you don’t like the highlighted area.
• Pivot: This is the centerline color of this indicator. above this line three lines will plot and below this line, 3 lines will plot. by default color of this line is black.
• Resistance 1, 2,3 will plot above the center line. my recommendation use all resistance level colors to RED for a better view.
• Support 1, 2,3 will plot below the center line. my recommendation to use all support levels color to GREEN for a better view.

## Pivot Points Calculation

• The center line was created by the average of the period high low and closing price.
• Support and resistance levels are calculated by high lows average and then substrate by center line. and the calculated value will plot above and below the centerline.

Pivot Point Formula:

```Center line : (Period High + Period Low + period Closing)/3.
Support and Resistance level: Center Line - ( Period High+ Period Low)/2.```
```If Period High low and closing price is 148,138,146 respectively. then the center ln calculation will be = (146+138+146)/3 =144.
and support and resistance formula = 144-(146+138)/2= 1 ```

So the center line value will be 144 and support and resistance level will plot 1 above and below the centerline.

## PP indicator usage

• The Pivot points indicator tells you, when the support and resistance zone of the share price.
• above the center or middle line (pivot line) bullish side. and below the middle line is bearish side.
• For long term trading, use the 1 day or more time frame chart, and for short term trading (intraday or scalp trading) you can use this indicator.

## Pivot Points trading strategy

Strategy 1

Buying strategy: If the candlesticks are moving in an upward direction. after breaking any support or Resistance line you can buy the stock. and after buy the stock the line will be a support line for you. then you can wait for the next above line breakout.

if the price is breaking the next line you can stick to the stock and the next line will be the support line for you. exit when share Price is breaking the support line and moving downward direction.

Selling Strategy: if the share price candlesticks started falling down, after Breaking any support or resistance line, you can buy sell the stock. and the selling line will be stop loss for short selling.

and wait for the next downside line breaking. If share price breaks the next downside line, then stick to the stock. If the share price is started rising and moving above the next downside line. Exit from stock.

Strategy 2

Use this indicator with MACD Indicator.

In the Pivot Point indicator if the share price is giving you buying signal.

And in the MACD Indicator MACD line is crossing the signal line and moving above the 0 line. This is the buying signal in the MACD Indicator.

When both the indicator signal gives you a buying signal. Then buy the stock.

if PP Indicator giving you selling signal & MACD Indicator also giving selling signal then sell the stock.

## Conclusion

Pivot Points indicator Plot 6 resistance & Support line, above the middle line, the 3 lines are Resistance line and below the Middle line, the 3 lines are support lines.

In short term trading buy and selling shares in a support zone or in the resistance zone, it doesn’t matter. But for long term trading you can try to buy the stock above the centerline. And sell stock below the centerline…