Pivot point is a technical analysis indicator that helps you determine the overall market trend. With pivot points, you can know whether the market trend is bullish or bearish and also determine how sustainable the trend is.
Technically speaking, the pivot point is the average of the intraday high, low, and closing price from the previous trading day.
If the stock trades above the pivot point on the next day, it is assumed that the stock is in a bullish trend. On the other hand, if the stock trades below the pivot point on the next day, it is assumed that the stock is in a bearish trend.
Pivot point also helps you determine the Support and Resistance levels of the stock. These are the levels where the stock price will stop moving and reverse.