Pivot point formula:

• Pivot point = (high (previous) + low (previous) + close (previous)) / 3

General idea about the pivot point.

• Resistance 3 and support 3 are considered to be clear indicators of the maximum range of extreme volatility, though it is possible to pass them through.
• Pivot lines work well in the sideways markets, as the prices are most likely to be located between the resistance 1 and support 1 lines.
• Within a strong trend, the price is expected to be lower than the pivot point line and continue moving.
• If the breaking news released may affect the market, the price is likely to go straight through resistance 1 or support 1 and even reach resistance 2 and resistance 3 or support 2 and support 3.
• If the trend breaks resistance or support through, it is likely to result in a significant price movement, it is also referred to as breakout.