This article will tell you how to find the levels of support and resistance with the help of pivot points.
Calculating of pivot points is very simple, you will easily find these calculations on different sites devoted to the work on the Forex market. Calculation pivot points you use the following:
PP — pivot points
H — the highest level of a price at the previous day
L — the lowest level of a price at the previous day
C — the closing price at the previous day
R1-R3 — lines of resistance
S1-S3 — lines of support
That’s it. With the help of these calculations you can determine the aims of the currency pair’s movement. There is a very interesting fact, a price often comes to the line of resistance or the line of support to within one point.
Woodie pivot points
Pivot Points = (Highest level + Lowest + 2*Closing price) / 4
Resistance1 = (2 * Pivot Points) – Lowest level
Resistance2 = Pivot Points + Highest level – Lowest level
Support1 = (2 * Pivot Points) – Highest level
Support2 = Pivot Point – Highest level + Lowest level
As you can see from the formula, the calculation of pivot points pays a great attention to the parametres of the day closing.
Calculating Camarilla levels you do not have to calculate pivot points. You only calculate the levels of support and resistance. But that doesn’t mean that you can not calculate pivot points using the formula written above.
R4 = (H – L) * 1,1 / 2 + C
R3 = (H – L) * 1,1 / 4 + C
R2 = (H – L) * 1,1 / 6 + C
R1 = (H – L) * 1,1 / 12 + C
S1 = C – (H – L) * 1,1 / 12
S2 = C – (H – L) * 1,1 / 6
S3 = C – (H – L) * 1,1 / 4
S4 = C – (H – L) * 1,1 / 2
Camarilla levels were calculated by a very successful trader Nick Scott. The calculation of the levels had been in secret for a long time. Camarilla levels as the levels of the classic variant show very good results very often, although it has to be mentioned that they show different levels. So, it would be reasonable to use these levels in a pair. The levels S3,S4,R3,R4 are considered as very important. You have to pay attention to them.
The levels of Thomas Demark
There are two levels in the given calculations. These levels predict where a price may move at the given period. They show the predictable maximal and minimal price meaning on a graphic.
R1 = X / 2 – L
PP = X / 4
S1 = X / 2 – H
If C < O then X = (H + (L * 2) + C)
If C > O then X = ((H * 2) + L + C)
If C = 0 then X = (H + L + (C * 2))
You might sat that the theory is nice, but it will be very boring to calculate manually all those levels. You are completely right. But we are lucky, because the indicator that shows classic levels and Camarilla levels has been created. The indicator also has other functions. You should make some experiments with the settings of the indicator.
As a result, we may say that the levels often give right signals. Using the levels in your trade system will be very useful, but you have to use them sensibly.
As in any other niche of life foreign exchange market needs some knowledge.
Of course, one can start forex investment and be quite successful about it. But sooner or later the losses will come. It is precisely when one might think “Why didn’t I start with a good forex trading education?”
That does not mean that after reading even the greatest materials you will start closing trading positions with huge income, but this info will save you from lots of troubles. And even if you decide to get the help of a forex managed account service, still you will make a much wiser decision.
And some general tips – today the Internet technologies give you a really unique chance to choose what you require at the best terms which are available on the market. Funny, but most of the people don’t use this chance. In real practice it means that you should use all the tools of today to get the info that you need.
Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a wise and nicely balanced decision.
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