The Alchemy Support and Resistance Pivot Point indicator identifies actual support and resistance points in real time and labels the chart for easy identification. The indicator also identifies and labels the previous day high and low. Many traders regard the previous day high and low as significant support and resistance points.

In addition to labeling support and resistance points, the indicator will also alert you with a pop-up window when current price is approaching a support or resistance pivot point.

What is support and resistance?

Support and resistance represent key points where the forces of supply and demand meet in a head to head clash. In all financial markets, prices are driven by excessive supply (bearish) and demand (bullish). Excess supply of a certain stock or commodity will cause prices to decline. Excess demand for a certain stock or commodity will cause prices to rise. When supply and demand is equal, prices will stabilize and move sideways as bulls and bears fight it out for control.

Support is the price where demand is thought to be strong enough to prevent price from falling further. Resistance is the price where selling is thought to be strong enough to prevent price from rising further. Support pivot points are below current price and resistance pivot points are above current price. If a stock or commodity is declining and approaching a support point, it can act as an alert to look for signs of increased buying pressure and a potential reversal to the upside.

If a stock or commodity is rising and approaching a resistance point, it can act as an alert to look for signs of increased selling pressure and a potential reversal to the downside. If a particular support or resistance point is broken, it signals that the relationship between supply and demand has fundamentally changed. A resistance point breakout signals that demand (bulls) has gained the upper hand and a support point breakout signals that supply (bears) has won the battle. The Alchemy Support & Resistance Pivot point indicator will label these key points and warn you when current price approaches them.

How are support and resistance pivot points used?

Many traders use support and resistance pivot points to determine entry points in the market, exit points to take profits and areas to adjust stop orders. In a sideways market, many traders use pivot points to range trade by buying near support and selling near resistance. Breakout traders use pivot points to identify price breakout areas. Counter-trend traders use the pivots to help identify possible turning points in the market.

The Alchemy Support and Resistance Pivot Point indicator is easily combined with other indicators to help identify possible trade set-ups. For example, it could be used with the Alchemy Bar Pattern Analysis to help identify potential turning points, the Strong Trend Indicator for entry points in an established trend or the Alchemy Fib Retracement indicator for entries on pullbacks to support or resistance areas.

Identification of key support and resistance pivot points is usually considered an important ingredient to successful technical analysis. Being aware of these pivot points can greatly enhance a trader’s ability to analyze and forecast future price action. Using the Alchemy Support and Resistance Pivot Point indicator can help structure the market by identifying the key points of support and resistance.