What Are Pivot Points?
Pivot points are a tool used by professional traders and market makers to identify potential support and resistance levels in the market.
In simple terms, a pivot point — along with its support and resistance levels — marks areas on the chart where the price might change direction.
Why are pivot points so popular?
Because they’re objective.
Unlike some other indicators that rely on interpretation or judgment, pivot points are calculated using a fixed formula. No guesswork involved.
Pivot points work a lot like Fibonacci levels — they attract attention because so many traders use them. And when enough people are watching the same levels, they tend to influence price action… almost like a self-fulfilling prophecy.
But there’s one key difference:
Fibonacci levels require you to manually choose swing highs and lows, which can be subjective.
Pivot points, on the other hand, are calculated the same way by nearly every trader, which makes them more consistent.
That’s why many traders — especially short-term traders — rely on pivot points to spot potential turning points in the market and capitalize on small price movements.
Just like traditional support and resistance, you can trade bounces off pivot levels or breakouts through them.
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Range-bound traders love pivot points because they help spot potential reversal zones where price may bounce back.
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Breakout traders watch pivot points to identify important levels that need to break for a genuine breakout to happen.
Here’s an example of pivot points plotted on a 1-hour EUR/USD chart:
(Imagine horizontal support and resistance levels drawn neatly across your chart — yes, it’s that convenient!)
Pivot Point Terminology
Here’s a quick breakdown of the labels you’ll see:
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PP = Pivot Point
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S1, S2, S3… = Support levels
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R1, R2, R3… = Resistance levels
But don’t get too fixated on the idea that “S1 must always act as support” or “R1 must hold as resistance.” The market can be flexible — and we’ll explain why later.
In the next lessons, you’ll learn:
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How pivot points are calculated
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The different types of pivot points
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And most importantly, how to apply them in your forex trading strategy
Time to level up your trading toolkit!