Calculating pivot points and Fibonacci Levels in Forex

To calculate pivot points and Fibonacci levels in Forex is final when defining the probability of success in the Forex market. In this article we first define the concepts of Fibonacci levels pivot point and then move on to learn how their calculation realizarel and thereby giving the investor forex basic tools which are crucial for generating revenue with their activities in that market.

The Pivot Point

When we talk about Forex pivot point in referring to an index that shows whether the market is up or down. The variables required to calculate the pivot point are values ​​obtained by observing the behavior of the market yesterday. More precisely we need to know the highest point, the lowest point and closing movements in the value provided. The value referred to in this the of one currency against another. At this point we should clarify that, because the Forex market operates 24 hours a day, has agreed to use as opening and closing hours of 17:00 pm Eastern U.S..

Fibonacci Levels

One of the methods used to analyze the movements in the currency market is the set of Fibonacci values, so called because it is based on the famous mathematical sequence of the same name. This sequence begins with the numbers 0 and 1 and adding the figure is arming whose value is the result of the sum of the two previous numbers (0, 1, 1, 2, 3, 5 ...).

Applying this sequence to the Forex market rates have been set of changes in value of one currency against another. Typical values ​​are 0.618, 0.500, 0.382 and 0.236. These figures should be understood as a percentage, ie 61.8%, 50%, etc.. . Fibonacci levels have been established as a widely accepted technical index of the participants of the Forex market.

But do we help calculate Fibonacci numbers Forex market? They help us to predict the values ​​of regression, ie, to approximate the values ​​that a currency may assume after a change of trend in price, either up or down.

How to calculate the pivot point and Fibonacci levels?

To calculate the pivot point on a given day simply must do the following calculation:

Pivot Point = (highest value + lowest value + value close) / 3

Put another way, we averaged these three values.

But the pivot point value alone is not very useful. In order to use it to market decisions must also calculate various levels of the known values ​​as support and resistance. The latter are calculated as follows:

For the first level:

First Support = (2 * Pivot Point) - A value higher

First Resistance = (2 * Pivot Point) - the lowest value

For the second level:

Second support = Pivot Point - (highest value - lowest value)

Second resistance = Pivot Point + (highest value - lowest value)

We could continue to calculate more levels. It is worth mentioning that there are other types of pivot points and methods to calculate them. Among them are Tom DeMark pivot points, pivot points and Woodie Camarilla pivot points.

As we have seen, it is possible to calculate pivot points manually but it is much more advisable to use for this special calculators such as those offered in the best websites devoted to the subject of Forex. They offer various support and resistance levels as well as other relevant data.

Let us now turn to the calculation of Fibonacci levels. To do this we know the highest price and the lowest of the previous trend to reverse:

(H) maximum Quote

(L) minimum contribution

Then we calculate the difference between them:

(Dif) H - L

With these values ​​we can proceed to calculate the probable retracement levels after the change of trend. In the case of a reversal of an uptrend (R1 = first regression, R2 = second setback ...):

R1 = H - (0.382 X Dif)

R2 = H - (0.500 X Dif)

R3 = H - (0.618 X Dif)

R4 = H - (1,000 X Diff)

If instead we have a reversal of a downtrend:

R1 = L + (0.382 X Dif)

R2 = L + (0.500 X Dif)

R3 = L + (0.618 X Dif)

R4 = L + (1000 X Dif)

As for the Fibonacci levels, they also account for what is said in reference to the pivot points. It is possible to calculate manually, but is much more convenient and advisable to use an online calculator of these values.

Fibonacci Calculator

Pivot Calculator