Pivot points are levels calculated from the previous period's high, low and close. Day traders love them because everyone gets the same levels, no drawing required.
The standard formula
Formula
PP = (High + Low + Close) ÷ 3
| Level | Formula |
|---|---|
| R2 | PP + (High − Low) |
| R1 | (2 × PP) − Low |
| PP | (High + Low + Close) ÷ 3 |
| S1 | (2 × PP) − High |
| S2 | PP − (High − Low) |
Example
Yesterday: High 1.1000, Low 1.0900, Close 1.0980. PP = 1.0960. R1 = 1.1020, S1 = 1.0920, R2 = 1.1060, S2 = 1.0860.
Wick says
Good news: every platform calculates these for you. Bad news: you still have to decide what to do when price gets there.
Key takeaways
- Pivots come from the previous day's (or week's) high, low and close.
- Above PP = bullish bias; below = bearish.
- R1/R2 and S1/S2 act as intraday resistance and support.