Pivot Points

Overview

Pivot Points are pre-calculated support and resistance levels derived from the previous trading session’s high, low and close. Floor traders used them for decades before electronic trading, and they remain widely watched by day traders today — especially on equity index futures and major forex pairs.

Several variants exist (Classic, Fibonacci, Camarilla, Woodie, DeMark) — we’ll focus on the Classic / Standard pivot points.

Formula (Classic)

Pivot Point (P) = (High + Low + Close) / 3

R1 = 2 × P - Low
R2 = P + (High - Low)
R3 = High + 2 × (P - Low)

S1 = 2 × P - High
S2 = P - (High - Low)
S3 = Low - 2 × (High - P)

H, L, C taken from previous session

Default Settings

• Type: Classic / Standard (most common)
• Period: Daily (most common for day trading); also weekly / monthly for swing trading
• Levels plotted: P (central pivot), R1–R3 (resistance), S1–S3 (support)

How to Use It

1. Bias Filter

• Price above central pivot P — bullish bias for the session
• Price below P — bearish bias

2. Support / Resistance Levels

Each level acts as potential reaction zone. Price commonly bounces from S1 (or rejects from R1). Stronger reactions at S2/R2; S3/R3 typically reached only on strong directional days.

3. Breakout Strategy

If price breaks decisively through R1 with momentum, target R2; through R2 target R3. Same logic in reverse for S levels.

4. Range Trading

In sideways markets, price oscillates between S1 and R1 around central pivot — fade extremes back toward P.

Variants

• Fibonacci Pivots — use Fibonacci ratios (38.2%, 61.8%) to space the levels
• Camarilla Pivots — 8 closer-spaced levels; popular for intraday scalping
• Woodie Pivots — weighted toward closing price; emphasize close strength
• DeMark Pivots — conditional formula based on close vs open relationship

Strengths

• Pre-calculated and objective — no judgment required
• Self-fulfilling — widely watched, so levels often react
• Excellent intraday reference for day traders
• Works on equity, futures, forex, crypto

Weaknesses & Common Mistakes

• Variant confusion — different platforms show different variants; ensure you know which one you’re using
• Treating levels as exact lines — better thought of as zones
• Ignored after news events — major news can blast through pivot levels without reaction
• Less effective on higher timeframes — daily pivots are primarily intraday tools

Best Combinations

• Pivots + VWAP — both intraday reference levels; powerful combined
• Pivots + Volume — breakout from a pivot with volume expansion is high-probability
• Pivots + Candlestick Patterns — rejection candles at pivots provide entry triggers

Practical Example

S&P 500 E-mini futures, 5-minute chart. Price opens between P and R1. Climbs to R1 and rejects with a pin bar. Short entry, stop above pin bar high, target P (central pivot). Classic intraday pivot fade trade.

Bottom Line

Pivot Points are a day trader’s default coordinate system. You don’t have to trade off them, but you should always know where they are.