How to use pivot points to measure Market Sentiment?1 min read
Pivot points have got another role to play in forex trading, that is, using it to assess market sentiment. Through this you can guess correctly if traders want to buy or sell the pair.
The price dominates the pivot point to the top means the traders are bullish on the pair and you must start buying the pair.
Below, is an example of what happened when the price stayed above the pivot point.
Above, you see that EUR/USD is gapped up and opened above the pivot point. The price rises higher and hovers all the resistance levels.
When the price dominates the pivot point to the bottom, you must start selling the currency pair. If the price is below the pivot point, the signal sentiment will be bearish. The sellers can take over the trading session.
Let us explain further with GBP/USD chart.
In the chart, the price tests the pivot point that held as a resistance level. The pair collapses. The price remains below the pivot point and sells the pair. If forex traders are bearish on a pair, the pair shifts and emerges to the top.