The Pivot Point Universal Indicator is a popular technical analysis tool used by traders to identify potential support and resistance levels in the market. In this article, we will discuss the definition, working, and best settings of the Pivot Point Universal Indicator for MT5, and how to use it to trade in the forex market.
Definition
The Pivot Point Universal Indicator is a technical analysis tool that is used to calculate potential support and resistance levels based on the previous day’s price action. It is based on the concept of market power, which is the ability of buyers and sellers to influence the price of an asset.
Working of Pivot Point Universal Indicator in MT5
The Pivot Point Universal Indicator for MT5 works by calculating potential support and resistance levels based on the previous day’s price action. It then displays these levels on the chart, which can be used by traders to identify potential entry and exit points.
The Pivot Point Universal Indicator typically uses the previous day’s high, low, and closing price to calculate the support and resistance levels for the current trading day. It also calculates additional support and resistance levels, known as R1, R2, R3, S1, S2, and S3.
Best Settings for Pivot Point Universal Indicator
The best settings for the Pivot Point Universal Indicator depend on the trading strategy and the time frame being used. Generally, traders use a shorter time frame, such as 5 minutes or 15 minutes, for intraday trading, while a longer time frame, such as 1 hour or 4 hours, is used for swing trading.
Traders can also customize the appearance of the Pivot Point Universal Indicator by changing the colors and other settings.
How to Trade with Pivot Point Universal Indicator?
The Pivot Point Universal Indicator can be used to analyze market trends and potential price movements. Here are two common ways to use the Pivot Point Universal Indicator to trade in MT5:
Identify Potential Support and Resistance Levels
Traders can use the Pivot Point Universal Indicator to identify potential support and resistance levels in the market. When the price of an asset approaches a support level, it is likely to bounce off and start moving upwards, while a resistance level can act as a ceiling and prevent the price from moving higher. By identifying potential support and resistance levels, traders can potentially make profitable trades by going long or short on the respective currency pairs.
Confirm Trading Signals
Traders can also use the Pivot Point Universal Indicator to confirm trading signals from other technical analysis tools. For example, if a trader identifies a potential buying opportunity based on a moving average crossover, they can confirm the signal using the Pivot Point Universal Indicator to ensure that the price is not likely to encounter resistance at higher levels.
Features of Pivot Point Universal Indicator
The Pivot Point Universal Indicator has several features that make it a useful tool for traders. Some of these features include:
- Real-time data on potential support and resistance levels in the market
- Can help traders identify potential trading opportunities
- Customizable settings to suit different trading strategies
Conclusion
The Pivot Point Universal Indicator is a powerful tool that can help forex traders analyze market trends and make informed trading decisions. By incorporating the Pivot Point Universal Indicator into their trading approach, traders can gain an edge in the market