One of the purpose of this blog is also to provide a platform for enhancing knowledge in the exciting field of technical analysis. In this context, I have today taken the topic of the widely popular "pivot points".
Check the following link to know calculation of the Pivot points
www.pivotpointtrading.com
PIVOT POINTS are essentially price levels calculated based upon the previous day's (or period's) High , Low and Closing price levels.
Normally they are used by day traders (those who don't use much of technical analysis) to provide them with a clue of price levels where prices may find support and resistance.
However even investors may use them for similar purposes. Personally I use the Pivot point to indicate the market's bias - whether one should be bullish or bearish. Thus if prices are below the main 'pivot' point trend is assumed weak and if above then it is considered strong.
The R1 and S1 points indicate Resistance and Support levels. Thus as prices approach R1, the trader / investor would get cautious of profit booking / resistance to price rises and vice-versa.
In the following Nifty chart I have computed and shown the 'WEEKLY PIVOT' point and the Weekly R1 and S1.
For the first three days of the current week, the Nifty remained below the Weekly Pivot and today (thursday ) it has broken above it. Weekly R1 is placed at 5169 and as prices approach this level it should help short term traders to book profits. Weekly S1 is at 4883
However , I may add here that my own use of Pivot points is only of treating it as a reference level and not for taking any actual trading / investing decision.
I shall revisit the Pivot Points and their importance in subsequent posts too.
Happy Trading
CA Rajiv D Khatlawala
4 comments:
You didn't show us how it is calculated? Since most of people are not even aware how it is doen, how can we grasp it in first place?
Thanks for your comment
I have updated the Pivot Point post .. Check the link www.pivotpointtrading.com for calculation of the Pivots
Regds
CA Rajiv
Dear Sir,
Articles on TA like this will always be enlightening for beginners in the world of TA like many of your readers.Further supporting them with specific stock analysis will be highly useful.I have made a habit of keeping all your analysis posts collectively so that I can refer them
in the free time.
Regards,
Neil
Hello Sir,
This is a very useful article you have have presented here..esp for traders...
thank you..
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