Business Technique: Tracking Prices Using Pivot Points

Price Movement Based on Pivot Points

The term “pivot” is used in both French and English, with “Pivot Point” referring to the central point around which the price moves.

When trading on financial derivative markets, such as coffee, traders who rely on technical analysis often use various tools. Many believe that tracking prices using pivot points is one of the effective tools for determining the right time to enter or exit a market when the price hits certain levels calculated using pivot points.

Definition

The “pivot point” is a technical analysis indicator used in trading to determine the overall price direction of the market on different time frames. The pivot point itself is understood as the average of the highest, lowest, and closing prices of a previous trading period.

When the market price is above the pivot point, it is considered a bullish market, indicating that prices are likely to rise. Conversely, when the price is below the pivot point, it signals a bearish market, indicating potential price declines.

The analysis of price using pivot points is often related to support and resistance levels, much like price direction analysis. In a pivot point analysis, the first support and resistance levels are calculated based on the fluctuation between the highest and lowest prices of the previous trading day. Subsequent high and low levels are calculated within the range of the previous trade’s fluctuation.

Since these price levels are based on averages, the accuracy of this method is relatively approximate. However, it is effective for gauging overall trends.

Price Based on Pivot Points for the Next Trading Day

For example, the pivot point price for July 27, 2015, is as follows:

We aim to regularly provide this technical calculation table for your reference.