Pivot Point

Pivot Point - The pivot point is the term used to describe a formula used to estimate approximate values for the market price of a given stock. As the price increases with daily trading a hypothetical ?ceiling? is reached where the highest trade values are and a theoretical baseline is established. When the market price exceeds this typical perimeter in either direction it is referred to as the pivot point. If it is above it is considered a new support level while a drop below the pivot point is called a new resistance level. This calculated estimation is often used by the Foreign exchange market to determine constancy of value. The mathematical formula is simple. The sum of the lowest, highest and closing price; divided by three.