A pivot point is a price level calculated from previous prices. It's used to indicate potential areas of support or resistance that offer attractive reward-to-risk setups for trades. The pivot point itself is simply the average of the intraday high and low and the closing price from the previous trading day. Trading above the pivot point on the subsequent day is thought to indicate ongoing bullish sentiment. Trading below the pivot point indicates bearish sentiment.
The pivot point is the basis for the indicator but it also includes other support and resistance levels that are projected based on the pivot point calculation. All these levels help traders see where the price could experience support or resistance. It lets the trader know that the price is trending in that direction if the price moves through these levels.