What is PIVOT Points
- This is technical analysis indicator to understand overall trend of particular scrip. It’s a simple mathematical formula to find potential trend or support or resistance.
- The intraday use this to find stock is in trend or in no trade zone.
Pivot point analysis is mainly used for finding support and resistance levels. Here nearest support and resistance levels calculated using distance between trading range between the pivot point and High & Low of the previous day. Next support and resistance levels calculated using the entire distance between the high and low prices of the previous day.
This points are commonly used intra-day support and resistance indicators for futures, options, commodities. The major difference from other indicator is this levels do not change for entire day compare to others tools like moving averages or indicators or oscillators. Previous day’s trading range is used to calculate five pivot point levels.
Pivot Point Formula
Pivot Point (pp) = (h + l + c) / 3;
Resistance (r1) = 2 * pp – l;
Resistance (r2) = pp +(r1 – s1);
Resistance (r3) = pp + 2 * (h – l);
Support (s1) = 2 * pp – h;
Support (s2) = pp – (r1 – s1);
Support (s3) = pp – 2 * (h – l);
Fibonacci Pivot Points
•Fibonacci pivot point levels are determined by first calculating the pivot point like you would the standard method.
•Next, multiply the previous day’s range with its corresponding Fibonacci level. Most traders use the 38.2%, 61.8% and 100% retracements in their calculations.
•Finally, add or subtract the figures you get to the pivot point and voila, you’ve got your Fibonacci pivot point levels!
PP = (H + L + C) / 3
R3 = PP + ((High – Low) x 1.000)
R2 = PP + ((High – Low) x .618)
R1 = PP + ((High – Low) x .382)
S1 = PP – ((High – Low) x .382)
S2 = PP – ((High – Low) x .618)
S3 = PP – ((High – Low) x 1.000)
C – Closing Price, H – High, L – Low