Which timezone should I calculate the pivot points? Does it differ for different currencies (talking about majors generally)?
Ok I read that pivot points are calculated mostly by the New York Close, which is 17:00 New York Time.
I am from a country that doesn’t practice daylight savings time; how does daylight savings affect the time? I am using Alpari UK, and they use Central European Time for their trading hours.
Correct me if I’m wrong,
With daylight savings:
New York session is 14:00 to 23:00 CET? What about without daylight savings?
What about Asian sessions and London sessions?
jawnlooi,
You don’t need to be concerned with time zones when using pivot points.
Pivot points are calculated using only three data points per time interval: the high, the low and the close (H, L, and C).
The following parameters DO NOT figure into the pivot point calculations: the length of the time interval you are using, the starting time of that time interval, or the time-zone you are in.
In other words, if you give me the H, L, and C for some time interval (but don’t tell me the length of the time interval, or when it began), I can still give you the pivot points for the following time interval (of equal length).
All trading platforms begin new time intervals simultaneously in all time frames, except the 4-hour time frame and the daily time frame. In other words, at 02:35 GMT (just to pick a time at random), everyone’s charts begin a new 5-minute candle, no matter where you are in the world. And at 05:00 GMT, everyone’s charts begin a new 1-hour candle. And so forth.
But the starting time for the 4-hour chart, and for the daily chart, depend on when each platform begins its new “day”. The result of this is that your 4-hour chart, and your daily chart, might look slightly different from mine. And, if we both use pivot points on these charts, we might be looking at slightly different support and resistance levels. Amazingly, pivot point theory says that this doesn’t matter: your pivot points are valid on your charts, and my pivot points are valid on my charts!
You said that you are using the Alpari MT4 platform, which is on CEST (Central European Summer Time). That platform begins its “day” at midnight CEST, which is 18:00 EDT (New York time) — very close to the New York Close at 17:00 EDT that you were asking about.
If you’re using that platform, it doesn’t matter where YOU are — your daily charts will be very nearly in sych with the 17:00 EDT time you mentioned, whether you are in Hong Kong or South Africa (or any place else that doesn’t observe Daylight Saving Time).
Trading sessions — the Asian, European and North American Sessions — don’t have a bearing on pivot point analysis.
Regarding your question about different currency pairs: a separate calculation IS required for each currency pair and each time frame.
This pivot point stuff isn’t as complicated as you thought. Good luck with it.
I hope this helps you.
Clint
Hi and thanks for the reply
I believe time zone does matter for pivot point calculation; specifically daily ones. I read somewhere that most banks use the New York close to calculate the daily pivot points.
The daily GBPUSD pivot point for 22nd April is 1.4615 if I calculate according to New York close (I think it is 22:00 CET). If I were to vary the calculation and use 07:00 CET, I get 1.4603. A whopping 12 pips difference. (Also, for the 4 hour chart especially, different brokers have different 4 hour starts, and it render pivot point trading useless, no?)
This especially matters if close to the end of the New York close something big happens and the close of the last hour candle is drastically different, the pivot point calculations will move around alot.
So the theory, much like candlestick trading where the start/end doesn’t matter because it just shows you how the market reacts, would not work as well with trading because if I were to place a short the moment it went below 1.4603 (7:00 CET as day start), I would have lost out 12 pips of profit, and possibly even made a wrong trade (see the hesitation at 9:05 - 9:35 CET, around the 07:00 CET pivot point, whereas in the 22:00 CET pivot point it has broken clear of the PP and is actually getting ready for the next big down move)
Another question is: Does daylight savings affect trading hours? Like for example now does the Asian session no longer coincide with London’s session? Because according to the website " forex. timezoneconverter .com " (if the link is removed, google for “Forex Market Hours - Forex Market Time Converter”) it isn’t, but all other charts I can find show that Asian and London share one hour.
Hello,
If you’re calculating Pivot Points / Levels for the DAILY timeframe then the timezone DOES matter (and yes: the New York prices are the correct ones to be using). Anybody that says otherwise is ‘putting the cart before the horse’ and forgetting that Pivots ‘work’ BECAUSE PEOPLE move price to those levels. The point is: NOBODY CARES or IS WATCHING where price settled in Romania (for example and no offense is meant) but they DO CARE where price settled in New York!!! On the one hour timeframe and shorter there should be no difference though. All of this is PARTICULARLY important when trading stocks, bonds, and commodities in the US. I’ve covered this subject before here so do a search of this forum for Pivot Points / Levels and you’ll find a link that I posted to the Metatrader forums (I’m ASSUMING you’re using MT4 of course). You will then find a Pivot Point Indicator for MT4 that allows you to ‘offset’ or ‘compensate’ for the difference in timezones.
Regards,
Dale. (forexbrokersonline.net).