The simplest way to use pivot point levels in your forex trading is to use them just like your regular support and resistance levels. The more times a currency pair touches a pivot level then reverses, the stronger the level is. In the chart above, you see that price is testing the S1 support level.

If you think it will hold, what you can do is buy at market and then put a stop loss order past the next support level.

As for your take profit points, you could target PP or R1, which could also provide some sort of resistance. Looks like S1 held as support! Ice cream and pizza for you!

You should note whether pivot point levels line up with former support and resistance levels. You can also incorporate candlestick analysis and other types of indicators to help give you more confirmation.

For example, if you see that a doji has formed over S1, or that the stochastic is indicating oversold conditions, then the odds are higher that S1 will hold as support. Also, most of the time, trading normally takes place between the first support and resistance levels. Occasionally, price will test the second levels and every once in a while, the third levels will be tested. What will you do when that happens?

Continue to hold onto your trade and be a sucker and watch your account dwindle away?

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Or will you take advantage and get back some pips? To establish true self-esteem we must concentrate on our successes and forget about the failures and the negatives in our lives.

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Using Pivot Points In Forex Trading

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