Difference Between Fibs and Pivot Points

[crunch]

What is the difference between Fibs and Pivot points?

They appear to be the same concept and why would we want to use one or the other...

[mariobros]

Difference between Pivots and Fibonacci levels is interesting if you like this stuff.

Pivot points and Fibonacci retracements are both technical analysis tools used by traders and investors to identify potential support and resistance levels in financial markets. However, they differ in their calculation methods and the underlying principles they are based on:

Pivot Points: Pivot points are calculated based on the previous day's high, low, and close prices. The most commonly used pivot point calculation method is the Standard Pivot Points formula, which involves calculating several levels of support and resistance. These levels are considered potential areas where the price may experience a reversal or significant movement.

Fibonacci Retracements: Fibonacci retracements are based on the Fibonacci sequence, a mathematical sequence where each number is the sum of the two preceding numbers (e.g., 0, 1, 1, 2, 3, 5, 8, etc.). Fibonacci retracement levels are drawn by identifying a significant price swing and then drawing horizontal lines at specific Fibonacci ratios (typically 23.6%, 38.2%, 50%, 61.8%, and 78.6%). These levels are considered potential areas of support or resistance where the price may reverse or consolidate.

In summary, the key differences between pivot points and Fibonacci retracements are:

Calculation Method: Pivot points are calculated using the previous day's price data, while Fibonacci retracements are based on specific ratios derived from the Fibonacci sequence.

Levels of Support and Resistance: Pivot points typically provide multiple levels of support and resistance, whereas Fibonacci retracements focus on specific retracement levels.

Application: Pivot points are commonly used for short-term trading and intraday analysis, while Fibonacci retracements are often applied to identify potential retracement levels within larger price trends.

Both pivot points and Fibonacci retracements are tools used to identify potential areas of support and resistance, but traders may have preferences for one or the other based on their trading strategies, preferences, or the specific characteristics of the financial instrument being analyzed.

Neither pivots or fib levels guarantee accuracy or successful trading outcomes, and they should be used in conjunction with other technical analysis tools and risk management strategies.

[adamalpha]

Pivot points seem to work better on some days, then they are completely irrelevant on other days.

The Fib pivots have days where the 38.2% works, some where 50% works, and others
 when 61.8% works. They too can't be relied on 100% of the time.

[Kraig]

These levels are based on probability, so they all work sometimes. How's that for an explanation? Experiment with each of the levels and see which ones work better than the others.

I like using Fibs on the market internals. Other than that I don't use them at all.