Many calculation calculators are used daily by many successful traders to determine key support and resistance levels, where they can expect the price to respond.
You can download a free point calculator from several websites on the web by performing a simple search on your favorite search engine.
However, I like to use the pivot point calculator, which I can adjust according to the exact currency pairs that I like. I also like the extra turn levels marked for reference.
The Microsoft Excel spreadsheet list makes it easy to create your own reference point calculator. (Or, if you prefer, you can download a free copy of the one I use, indicated in the resource field below).
Formula
The formula for creating pivot points is based on 4 digits that you need to get from your Forex mapping software. You just need these values, which can be obtained by looking at yesterday's candle on the daily chart:
- High
- Low
- open
- Close
The key figure at your pivot point of the calculator is the central pivot point. This value is obtained by summing the High, Low and Close figures together and dividing the total by 3. This is so! Now you have a central strong point.
This pivot point now gives you a basis for calculating other levels, such as R1, R2, S1 and S2.
Since the distance between these levels can sometimes be quite significant, many traders also place average levels in their charts and refer to them as M1, M2, M3 and M4. They are arranged as follows:
- M1 - between S1 and S2
- M2 - between S2 and center pivot point
- M3 - between the central turning point and R1
- M4 - between R1 and R2
S1: (Central turning point x 2) minus High
S2: Central turning point minus (R1 minus S1)
R1: (Central turning point x 2) minus Low
R2: (Central turning point minus S1) plus R1
Once these levels are calculated, then it is easy to set the M levels in your pivot point calculator.
M1: S1 minus S2 divided by 2
M2: Central turning point minus S1 divided by 2
M3: R1 minus the central turning point divided by 2
M4: R2 minus R1 divided by 2
In the resource window below is a link to a table that is configured for six major currency pairs. I use this pivot point calculator as part of my preparation for the daily trading session.
I just call my daily chart, I hover my mouse over yesterday's candle, which automatically opens a pop-up window showing High, Low, Close and Open values.
Then I simply enter them into the appropriate cells in the spreadsheet, and all the turning points are automatically calculated for me.
After that, I insert horizontal lines to mark the main reference levels on the 15-minute chart. This allows you to see the total area of price activity per day.
Sometimes the price will go beyond the average range for the day and exceed R2 or S2. In the table below, additional pivot levels are calculated to give some recommendations for such trading days.
Pivot points are one of the key tools used by traders to determine where the price can go and where it is likely to stop. Use the above formulas to create your own reference point calculator or use the free download below.
