Posted by forex at 6:36 AM
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1. Look at any stock chart from a software platform on the Web or on your computer. Identify the stock's most recent trading session and the highest, lowest and closing prices of the stock on that day. The 'closing' price refers to the last traded price of the day.
2. Open the stock pivot calculator. This can be a spreadsheet, a piece of standalone software, a hardware device running a stock pivot calculator or a Web page featuring an applet. The calculator will work similarly on any of these.
3. Type in the highest, lowest and closing prices for the stock in question into the calculator.
4. Press the 'Calculate' or 'Enter' button to process the stock pivot calculations based on your entered data.
5. View the results for the pivot numbers. These will take the form of 7 unique numbers. Three are 'resistance' numbers, 'R1,' 'R2' and 'R3.' Similarly three are support numbers, 'S1,' S2' and 'S3.' And there is a single central 'pivot' number, 'P.'
6. Monitor the stock's trading activity in the current day. The calculated pivot point numbers are only effective for the day following the trading session from which they were calculated. As prices fluctuate and approach any of the support or resistance numbers, be cautious about a potential market reversal at these prices. For example, if the stock opens at 123.45, and 'R1' is immediately above this price at 124.01, then the stock could find resistance at this number and have difficulty rising through this price. It could subsequently fall, forming a price reversal.