Pivot point
Family VI · Charts & indicators
Not to be confused with fibonacci pivot.
Pivot point is a horizontal price level computed from the previous period's high, low and close, typically the prior day's values. It serves as a reference for potential support and resistance in the current session. The main pivot is the average of those three prices, with additional levels projected above and below it.
Calculation
The standard pivot point (P) is the arithmetic mean of the prior period's high (H), low (L) and close (C):
P = (H + L + C) / 3
Additional levels, often labelled R1–R3 and S1–S3, are derived from P and the prior range. A common set of formulas is:
- R1 = 2P − L
- S1 = 2P − H
- R2 = P + (H − L)
- S2 = P − (H − L)
- R3 = H + 2(P − L)
- S3 = L − 2(H − P)
These levels are plotted on the chart for the current period and recalculated after each close. The method is deterministic, but the choice of period and the exact formulas can vary between charting packages.
Worked example
Interpretation and variations
Traders often watch price behaviour around the pivot: holding above it may suggest strength, while rejection below it may suggest weakness. The levels are not predictive guarantees; they are reference points that may coincide with areas of order flow.
Variations include the Fibonacci pivot, which uses Fibonacci ratios to project levels, and the Camarilla pivot, which uses a different set of multipliers. The period used (daily, weekly, monthly) and the session close time can affect the calculated values.
Often confused with
- fibonacci pivot
- A fibonacci pivot is a set of horizontal support and resistance levels calculated from the previous period's high, low and close, with the retracement ratios 23.6%, 38.2%, 50%, 61.8% and 100% applied to that range around a central pivot point.
See also
- forex technical analysis indicators
- price action
- fundamental analysis
- support and resistance
- technical analysis
- fibonacci