Most Forex traders and even brokers use pivot points to identify potential support and resistance levels. Trading requires reference points (support and resistance), which are used to determine when to enter the market, place stops and take profits. However, many beginning traders divert too much attention to technical indicators such as moving average convergence divergence (MACD) and relative strength index (RSI) (to name a few) and fail to identify a point that defines risk. Unknown risk can lead to margin calls, but calculated risk significantly improves the odds of success over the long haul.
One tool that actually provides potential support and resistance and helps minimize risk is the pivot point and its derivatives. We took the most popular pivot formulas and averaged the values to generate our price levels.
NOTE: These pivots only update once per day – Forex Pivots are recalculated once each day. We recalculate our pivots during at 3pm EST (i.e. that’s when Oanda closes one day and begins another and we use Oanda’s API to generate our pivots).