Pivot Points
For any market, there is an equilibrium point around which trading activity occurs. In the absence of large numbers of new buyers or sellers, this point serves as the pivot or focal point for floor traders (locals) and market makers as they adjust their bids and offers. When prices move away from the pivot, there are zones of support and resistance that can be derived from the established value area in the market. Penetration of these zones leads to perceived changes in valuation and the entry of new players into the market.
This is more of a trading tool than an investing tool, so we’ll leave it right here.
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