Technical analysis
Pivot Points: The Classic Formula, Support and Resistance Levels and a Worked Example
The classic pivot point formula with R1 to R3 and S1 to S3, a worked example, the Fibonacci and Camarilla variants, and which session to compute them from.
Updated · 4 min read
What pivot points are
Pivot points are support and resistance levels for the coming session, computed from the previous session's high, low and close. They came from the trading floors, where a trader needed a handful of levels for the day before the open and could work them out on a card. Because the formula is public and the inputs are the same for everyone, the levels are watched widely enough that price often reacts at them.
The classic formula
The pivot itself is the average of the previous session's high, low and close:
P = (H + L + C) / 3
The levels above and below are built from it and from the session's range:
R1 = 2P − LS1 = 2P − HR2 = P + (H − L)S2 = P − (H − L)R3 = H + 2 × (P − L)S3 = L − 2 × (H − P)
R1 and S1 are the pivot reflected across the previous high and low. R2 and S2 are a full previous-day range above and below the pivot. R3 and S3 are rarely reached on an ordinary day and mark an unusually large move.
A worked example
Suppose yesterday's session printed a high of 104, a low of 96 and a close of 101.
| Level | Arithmetic | Value |
|---|---|---|
| P | (104 + 96 + 101) / 3 | 100.33 |
| R1 | 2 × 100.33 − 96 | 104.67 |
| S1 | 2 × 100.33 − 104 | 96.67 |
| R2 | 100.33 + (104 − 96) | 108.33 |
| S2 | 100.33 − (104 − 96) | 92.33 |
| R3 | 104 + 2 × (100.33 − 96) | 112.67 |
| S3 | 96 − 2 × (104 − 100.33) | 88.67 |
The close above the midpoint of the range pulled the pivot above 100, so the levels sit slightly higher than a symmetrical set around the range would. That is the formula working as intended: a strong close shifts the day's reference upward.
Reading them
The pivot is the day's line in the sand. Trading above it is read as a positive bias for the session and below it as negative, and a move through it during the day is a change of bias. R1 and S1 are the first targets for a move away from the pivot and the first places to expect a reaction. A day that opens near the pivot and runs to R1 has made an ordinary move; a day that reaches R2 has made a full previous-day's range and is extended.
Pivots work best as places to look rather than as triggers. A level that coincides with something else, a moving average, the previous day's high, a round number, the edge of a gap, is worth more than a level on its own. And because they are built from one session, they are intraday levels: they say nothing about the trend of the week.
Variants
Fibonacci pivots keep the same pivot and scale the previous range by 0.382, 0.618 and 1.000 to place the levels: R1 = P + 0.382 × (H − L), R2 = P + 0.618 × (H − L), R3 = P + (H − L), and the mirror for support. Camarilla pivots ignore the pivot for the levels and place them close to the close, with the third and fourth levels at C ± (H − L) × 1.1 / 4 and C ± (H − L) × 1.1 / 2, which suits a range-bound day. Woodie's pivot weights the close double, P = (H + L + 2C) / 4. None is better in general; traders choose the set whose levels their market has respected.
Which session
The formula needs one high, low and close, and on a 24-hour market the choice of where a day begins and ends changes every level. Stock pivots use the exchange session. Futures pivots usually use the settlement and the full Globex session. Currency pivots most often use the New York close at 17:00 Eastern as the day boundary, though some desks use 00:00 UTC. Weekly and monthly pivots are computed the same way from the previous week's or month's bar and give the larger levels that intraday pivots sit inside.
On the desk
The symbol pages compute the classic pivot and its three resistance and support levels from the previous session beside the day's technicals, so the levels are on the page with the moving averages and the oscillators they are checked against.
Questions
- How are pivot points calculated?
- The pivot is the average of the previous session's high, low and close: P = (H + L + C) / 3. The first resistance is R1 = 2P − L and the first support S1 = 2P − H. R2 and S2 add and subtract the previous range from the pivot; R3 and S3 extend further.
- What do R1, R2 and R3 mean?
- They are the first, second and third resistance levels above the pivot. R1 is the first place to expect a reaction on a move up, R2 is a full previous-day range above the pivot and marks an extended day, and R3 is rarely reached except on an unusually large move. S1 to S3 are the equivalents below.
- Which high, low and close should I use for pivot points?
- For stocks, the previous exchange session. For futures, usually the settlement and the full overnight session. For currencies, most desks use the New York close at 17:00 Eastern as the day boundary. Whatever the choice, the levels only match other traders' levels if the boundary is the common one.
- Are pivot points useful for day trading?
- They are intraday levels by construction, built from one session for the next. They work best as places to look for reactions, especially where a pivot level coincides with a moving average or a previous high or low, rather than as signals on their own.
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