What is Pivot Point in technical analysis?

In technical analysis, a **pivot point** is a key price level that helps traders determine the overall market trend for the day. It is primarily used in day trading to identify potential support and resistance levels. Pivot points are derived from the previous day's price action, including the high, low, and close prices. Traders use the pivot point to assess whether the market is likely to move higher or lower during the trading day. If the price is above the pivot point, it signals a bullish market, and traders might expect upward momentum. If the price is below the pivot point, it suggests a bearish market, with downward movement likely. From the pivot point, additional levels of support and resistance are calculated. These levels help traders identify potential entry and exit points for trades. If the price approaches a support level and bounces, it may indicate a buying opportunity. Similarly, if the price reaches a resistance level and pulls back, it may signal a selling opportunity. Pivot points are widely used by intraday traders as they provide a quick and easy way to assess market direction and key price levels within the trading day.