Pivot Points

Pivot Points draws a set of horizontal levels for each period — a central pivot (P) with resistance levels above it (R1, R2 …) and support levels below (S1, S2 …) — calculated from the previous period's high, low and close. Floor traders used them before screens existed; they still mark the prices where intraday traders expect the market to pause or turn.

What it shows#

• Pivot — the central level of the period, gold, labelled P.
• Resistance — R1 to R5 above it, red; Support — S1 to S5 below it, green. How many of each depends on the Type.
• Each level is a line across its own period; the current period's levels run on to the right edge, with the level's name above the line and, by default, its price on the current period only.
• A period's levels are fixed from its first bar, so they never move while the period trades; new levels appear when the period rolls over.

How it is calculated#

With H, L and C the previous period's high, low and close, the Traditional pivot is P = (H + L + C) / 3, R1 = 2P − L, S1 = 2P − H, R2 = P + (H − L), S2 = P − (H − L), and so on up to R5 / S5. Fibonacci places R1–R3 and S1–S3 at 38.2 %, 61.8 % and 100 % of the range from P; Woodie weights the new period's own open; Classic steps R2–R4 and S2–S4 by whole ranges; DeMark draws one level each way, chosen by whether the previous period closed up or down; Camarilla (Nick Scott, 1989) sets tight levels around the previous close at fractions of the range, with R5 / S5 outside. The Period is the previous day, week, month or year; Auto uses daily levels on charts up to 15 minutes, weekly on longer intraday charts, monthly on daily charts and yearly from the weekly chart on.

How traders use it#

• P is the day's balance point: trading above it is read as a bullish day, below it as bearish. Many intraday traders take longs only above P and shorts only below it.
• R1 and S1 are the first targets and the first places to expect a reaction; a strong trend day runs through R1 to R2 or R3.
• A level that has been tested and held gains weight; a level broken on a close often becomes the stop for a trade in the breakout's direction.
• Camarilla's R3 / S3 are classic fade levels (sell at R3, buy at S3, stop beyond R4 / S4); its R4 / S4 are breakout levels.
• Watch out for the period: on a 5-minute chart the daily levels matter; on a daily chart the monthly ones do. Levels from a tiny previous range sit too close together to mean much, and a gap over several levels at the open leaves them irrelevant for that day.

Settings#

If the chart cannot load the daily or weekly bars the levels need, a small note says so and nothing is drawn.

Example on gold#

For example, yesterday gold traded between $4,276 and $4,312 and closed at $4,300: today's Traditional pivot is P = $4,296, R1 = $4,316, S1 = $4,280. Gold opens at $4,304, above P, and dips to $4,298 in the first hour without closing a 5-minute candle below P. An intraday trader buys near $4,299 with a stop at $4,290, under P, and takes profit at R1 ($4,316); if R1 breaks on a close, R2 ($4,332) is the next target. A 5-minute close under P, followed by a failed bounce, turns the day bearish and the plan to the short side, towards S1.

Add it to your chart#

1. Click Indicators in the top strip (on the Pro screen, press I).
2. Type pivot and click Pivot Points.
3. Click its chip in the legend to open the Inspector and change the settings; drag the chip to reorder; the dot hides it; × removes it.

Related#

• Pivot Highs and Lows — swing points of the price itself, not calculated levels
• 52-Week High and Low — the year's extremes as two lines
• VWAP — the other level intraday traders measure the day against
• Alerts — an alert when the price crosses a level
• Adding and tuning indicators