Name: Pivot Indicator
SKU: 42423
Availability: InStock

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The Pivot Indicator for MT5 automates the determination of pivot points and critical support/resistance levels, thus streamlining the process; a crucial asset for traders across the experience spectrum.

Essential to technical analysis, support and resistance levels equip traders to forecast price reversals and potentially lucrative trade opportunities. Nevertheless, the precise location and assessment of these levels proves challenging for numerous traders, particularly those new to the field.

Decoding the Pivot Indicator

The Pivot Indicator functions by charting seven horizontal levels onto the chart, these represent significant support and resistance zones that highlight potential areas where the price might reverse. These levels function as a map for price action, assisting traders in arriving at informed trading judgments.

A visual illustration of the pivot levels:

R1, R2, R3 – The initial, subsequent, and tertiary resistance zones
S1, S2, S3 – The initial, subsequent, and tertiary support zones
PP (Pivot Point) – A central zone (represented by a yellow horizontal line), indicating equilibrium between support and resistance forces.

The indicator also incorporates intermediate levels (midpoints), positioned strategically between the pivot point and each support/resistance zone, thereby amplifying the potential for refined trading possibilities.

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Key Features:

How are Pivot Points Determined?

MT5's Pivot tool derives these levels using the prior trading session's open, high, low, and closing prices:

Pivot Point (PP) = (Close + High + Low) / 3
First Resistance (R1) = (2 × PP) – Low
Second Resistance (R2) = PP + (High – Low)
Third Resistance (R3) = High + 2 (PP – Low)
First Support (S1) = (2 × PP) – High
Second Support (S2) = PP – (High – Low)
Third Support (S3) = Low – 2 (High – PP)

The Auto Fibo Indicator is an excellent companion to the Pivot Indicator; it helps traders correlate Fibonacci retracement levels with pivot points for even more accurate trade implementation.

Reasons to Employ the Pivot Indicator

Objective & Consistent – Unlike subjective indicators, pivot points are computed with a set formula, ensuring uniformity across all traders.
Beneficial for Short-Term Trading – Day traders and scalpers can use it to exploit small price fluctuations.
Utilized by Market Makers & Institutions – Many professional traders and market makers depend on pivot points to predict price reactions.
Functions Well with Other Indicators – Pairing it with RSI or MACD can enhance trading accuracy.

The Show Pips Indicator can also be integrated with the Pivot Indicator, providing traders with real-time profit tracking in pips and percentages, further supporting trade management.

Trading with the Pivot MT5 Indicator: Strategy

The Pivot Indicator suits both breakout and range traders:

Range Trading Strategy

S1, S2, S3 – Function as buy zones (support levels).
R1, R2, R3 – Function as sell zones (resistance levels).
Buy near support and sell near resistance, verifying entries with candlestick patterns.

Breakout Trading Strategy

If price breaks above R1, R2, or R3, it signals strong buying pressure—suggesting a bullish trend.
If price breaks below S1, S2, or S3, it indicates strong selling pressure—suggesting a bearish trend.
Traders can place buy/sell orders when these levels are surpassed with volume confirmation.

The Breakout Indicator is a useful supplement to the Pivot Indicator, enabling traders to spot confirmed breakouts for more confident trade implementation.

Furthermore, pivot levels can be used to set take profit and stop loss levels, ensuring risk management is effective.

Conclusion

The Pivot Indicator for MT5 is a powerful tool for helping traders identify significant market levels, refine entry and exit points, and elevate trade accuracy. When paired with other indicators like the Volume Profile Indicator or Fibonacci tools, its effectiveness amplifies.

For optimal outcomes, traders should always confirm pivot levels with price action and trend analysis, leveraging resources like Forex Factory or Investopedia to stay updated on market conditions.

By incorporating the Pivot Indicator into your trading strategy, you can improve trade precision and increase profitability in the Forex market.