How to Calculate a Stock’s Pivot Point
by Chris Perruna
(New Jersey, USA)
The pivot point can be calculated as the stock is forming the handle on a cup-with-handle base. The ideal buy price would be $0.10 higher than the highest spot during the handle, also know as the top of the right side of the base. The intraday high can qualify at the highest point and does not have to be the closing price of the stock. If the stock closes at the high for the day, then we will use this number as the high point.
The exact methods used for finding pivot points vary depending on the base pattern that is forming on a daily and/or weekly chart.
When a flat base occurs, an investor should look for a move $0.10 higher than the top point on the left side of the base or the start of the formation.
A saucer-with-handle follows the same rules as the cup-with-handle and is described in detail above.
A double-bottom formation triggers a pivot point that will be $0.10 higher than the middle peak in the “W” shaped pattern.
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