What is the pivot point technique primarily used for?

The pivot point technique is primarily used for identifying potential support and resistance levels in the market. This technique involves calculating pivot points based on the previous period's price action, specifically the high, low, and close prices. Traders use these pivot points to forecast areas where the price may reverse or consolidate.

Support and resistance are critical concepts in technical analysis, as they help traders make decisions about entry and exit points. When the price approaches a calculated pivot point, it often indicates a reversal or breakout potential, allowing traders to strategically position themselves in the market.

Other techniques or tools mentioned in the alternatives serve different purposes and do not focus on the determination of support and resistance levels. For instance, setting long-term investment goals is a more strategic planning approach, measuring market sentiment pertains to understanding the overall mood of market participants, and calculating historical volatility deals with assessing the price fluctuations of an asset over time. Each of these areas employs different methods and does not utilize the pivot point technique.