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Intermediate3 min readTechnical Indicators · 16/16

Pivot Points

Pivot points are levels calculated before the session from the previous session's high, low and close. There is no drawing and no personal choice involved: anyone applying the same formula gets exactly the same numbers.

What you will learn

  • Calculate the pivot, supports and resistances with the classic formula.
  • Understand what these levels describe about the previous session.
  • Know their limits, and why there is more than one way to calculate them.
The lesson as a short video · 20 seconds · Watch on YouTube
In this lesson
  1. The classic formula
  2. What do they describe?
  3. More than one method
  4. Check yourself
  5. Summary
  6. Related terms

The classic formula

Pivot (P)(High + low + close) ÷ 3 for the previous session.
First resistance (R1)2 × P − the low.
First support (S1)2 × P − the high.
Second resistance and support (R2, S2)P + the range, and P − the range. Range = high − low.
Worked exampleFor an invented stock, yesterday's high was 10.60, the low 10.00 and the close 10.40. P = 31.00 ÷ 3 ≈ 10.33. R1 = 20.67 − 10.00 = 10.67. S1 = 20.67 − 10.60 = 10.07. The range is 0.60, so R2 = 10.33 + 0.60 = 10.93 and S2 = 10.33 − 0.60 = 9.73.
R2Resistance 210.93
R1Resistance 110.67
PPivot10.33
S1Support 110.07
S2Support 29.73
From yesterday's session: H 10.60 · L 10.00 · C 10.40
Today's five levels, all from yesterday's session figures.

What do they describe?

The pivot is a simple average of the previous session's three key figures, so it describes that session's "centre". The supports and resistances are distances around that centre, sized by the session's range. If yesterday had a wide range, today's levels will be far apart; if it was quiet, they will be close together.

Because the formula is well known and everyone gets the same numbers, many traders watch the same levels. Sometimes that makes price react there, sometimes not, and there is no way to know in advance.

More than one method

The classic formula is the best known, but other methods give different numbers for the same session, and some tools use the week or the month instead of the day. So if two places show different numbers, check the method and the period before comparing.

Watch outPivot points are not limits price must stop at, nor a forecast of today's range. They are reference levels calculated from a past session.

See pivot points on an index

FoudaLens index analysis pages compute pivot points with the same classic formula. Open one and try calculating P yourself from the last session's figures.

IndicesStocks

Check yourself

1. High 21, low 19, close 20. What is the pivot?

(21 + 19 + 20) ÷ 3 = 20.

2. In the same example, what is R1?

R1 = 2 × 20 − 19 = 21.

Summary

  • Pivot = (high + low + close) ÷ 3 of the previous session, with supports and resistances around it.
  • The levels describe the previous session's centre and range, and everyone gets the same numbers.
  • There are several methods and periods, and the levels are references, not certain limits.

Related terms

Support and resistanceSame-day trading

Related lessons

Reading ChartsSupport and Resistance: How to Find Them on a ChartReading ChartsChart Timeframes: Daily, Weekly and Monthly
Previous · 15Fibonacci Retracement LevelsNext · 01What Is Fundamental Analysis?

Educational content only, not investment advice. Companies and figures in the examples are invented for illustration.