In addition to giving buy and sell signals, pivot points give traders a good time to get out of their trade. To illustrate, during a rally some traders will set their sell orders right below the next resistance line. Thus, pivot point resistance and support lines can generate ready made profit targets.
A 5-minute chart of the Nasdaq 100 ETF (QQQQ) is shown next:
In the 5-minute chart of the Nasdaq 100 ETF above, the QQQQ's opened the day downward, but held steady at Support 2 (S2).
From there, the Nasdaq 100 ETF rallied past S1 and the Pivot Point. Eventually, the QQQQ's found resistance at Resistance 1 (R1).
Next, the Pivot Point offered support initially, but then the QQQQ's meandered slightly above and below the pivot point, until finally, the QQQQ's accelerated past R1 and then past R2.
The rally continued until one candlestick reached R3, where the bulls were promptly rejected.
