Pivot Point

A pivot point is used by market technicians as an indicator that predicts the direction of market movement.

It is calculated by taking the average of the close, lows, and highs of a market or security for the prior trading day.  A bullish indication is given if the chart for the next trading day goes above the pivot point.  On the other hand, a bearish indication is given if the security’s or market’s chart trades below the previous days pivot point.  Further back up of a bullish or bearish indicator would be done by comparing multiple levels of resistance and support at levels that are above and below the pivot point.