Pivot Points are technical indicators calculated from previous trading day's high, low, and close, identifying potential support and resistance levels. Pivot Point system includes pivot point (PP), three support levels (S1, S2, S3), and three resistance levels (R1, R2, R3), widely used in day trading.
Standard Pivot Points: PP (Pivot Point) = (H + L + C) / 3 R1 = 2×PP - L S1 = 2×PP - H R2 = PP + (H - L) S2 = PP - (H - L) R3 = H + 2×(PP - L) S3 = L - 2×(H - PP) Where: H = Previous day's high L = Previous day's low C = Previous day's close
Standard Pivot Points: Most commonly used calculation method
Woodie Pivot Points: PP = (H + L + 2×C) / 4, emphasizes closing price more
Camarilla Pivot Points: Uses different multipliers, provides tighter support/resistance levels
Fibonacci Pivot Points: Uses Fibonacci ratios to calculate support/resistance
DeMark Pivot Points: Adjusts calculation based on open-close relationship
Price Above PP: Intraday bullish bias
Price Below PP: Intraday bearish bias
Price Breaks Above R1/R2/R3: Strong upward momentum, may continue to next resistance
Price Breaks Below S1/S2/S3: Strong downward momentum, may continue to next support
Price Bounces at Support: Buying opportunity
Price Retreats at Resistance: Selling opportunity
Pivot Point Breakout: Price breaking PP is important trend signal
Pivot Points are primarily used for day trading, calculated before trading day begins. Many intraday traders use pivot points as reference for entries and exits. When price is above PP, seek buying opportunities, buy near support, sell near resistance. When price is below PP, seek selling opportunities, sell near resistance, close near support. Pivot points can also be used for setting stops and targets.
Objective calculation without subjectivity, widely used creating self-fulfilling prophecy, provides multiple support/resistance levels, suitable for day trading, simple to use
Based only on previous day's data, may fail in trending markets, doesn't consider volume, may generate false breakouts, requires combination with other indicators
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