Pivot Points
Price levels calculated from the prior period's high, low, and close that act as projected support (S1–S3) and resistance (R1–R3) for the next session.
Formula
PP = (High_prev + Low_prev + Close_prev) / 3; R1 = 2 × PP − Low_prev; S1 = 2 × PP − High_prev; R2 = PP + (High_prev − Low_prev); S2 = PP − (High_prev − Low_prev)
Pivot Points use the previous period's high, low, and close to project a central pivot (PP) and support/resistance levels for the upcoming session. Floor traders used them for decades before electronic markets.
- R1 = 2 × PP − Low_prev, R2 = PP + (High − Low), R3 = High + 2 × (PP − Low)
- S1 = 2 × PP − High_prev, S2, S3 similarly derived
Price above the pivot favours a bullish session; below, bearish. S1/R1 are the most traded levels; S3/R3 are rare but significant. Camarilla and Woodie variants adjust the formulas for different trading styles.
Related Terms
Bollinger Bands
Volatility envelope drawn 2 standard deviations above and below a 20-period SMA; bands widen in volatile markets and contract during consolidation.
BeginnerDonchian Channel
Breakout envelope plotting the highest high and lowest low over the past n periods (typically 20); the midline is their average.
IntermediateIchimoku Cloud
All-in-one Japanese trend system with five lines that define support, resistance, momentum, and trend direction simultaneously.
AdvancedKeltner Channel
Volatility envelope using a 20-period EMA as midline and ATR multiples (typically 2×) as upper and lower bands.
Intermediate