This article has been translated from English to Gen Z Slang.
The easiest way to vibe with pivot point levels in your forex trading is to treat 'em just like your basic support and resistance levels.
Just like those trusty old support and resistance, the price be messin' with the levels on repeat.
The more a currency pair taps a pivot level and then bounces, the more solid that level is.
No cap, “pivoting” just means hitting a support or resistance level and then flipping the script.If you see a pivot level holding strong, it could open up some lit trading vibes for you.
- If the price is creeping up to the upper resistance level, you could SELL that pair and drop a stop just above the resistance.
- If the price is sliding down to a support level, you could BUY and pop your stop just below the level.
See? Just like your typical support and resistance! Easy peasy!
Let's peep an example so you can see what's up. Here's a 15-minute chart of GBP/USD.
In the chart above, you notice that price is testing the S1 support level. If you think it's gonna hold, you can swoop in and buy at the market, then place a stop loss order past the next support level.
If you’re playing it safe, you can set a chill stop just below S2. If the price smashes past S2, it's probs not coming back up, since S1 and S2 could turn into resistance levels.
If you’re feeling bold and sure that support at S1 will hold, you can drop your stop just below S1.
As for your take profit goals, you could aim for PP or R1, which might also act as resistance. Let's see what happens if you bought at market.
And bam! Looks like S1 was steady as a rock! Plus, if you aimed for PP as your take profit, you’d have nailed it! Woohoo! Time to treat yourself with some ice cream and pizza!
Of course, it ain't always that simple. Don’t just rely on pivot point levels alone. Check if they line up with previous support and resistance levels too.
You can also mix in candlestick analysis and other indicators for extra vibes.
For example, if you spot a doji over S1, or notice the stochastic showing oversold conditions, then the odds are better that S1 will hold up as support.Also, most trading usually goes down between the first support and resistance levels.
Sometimes the price tests the second levels, and once in a blue moon, the third levels get tested.
Finally, know that sometimes, the price will just bulldoze through all the levels like Rafael Nadal sweeping through opponents on the clay court.
What will you do when that happens?
Keep holding on to your trade like a fool and watch your account shrivel? Or seize the moment and snag some pips back?
In the next lesson, we’ll spill the tea on how to capitalize when these levels collapse.