Pivot Points (PP): How to Read It
Pivot points calculate key support and resistance levels from the previous period's high, low and close. Many short-term traders watch them as reference levels for the current session.
The formula
Common settings: Classic floor pivots based on the prior day
How to read it
- Price above the central pivot suggests a bullish bias for the session.
- Price below the central pivot suggests a bearish bias.
- R1 and R2 are potential resistance levels.
- S1 and S2 are potential support levels.
- Levels are fixed for the session once calculated.
Typical signals
- Bounce from S1 in an uptrend as a potential long entry.
- Rejection at R1 as a potential short or exit zone.
- Break above R1 with volume as a potential continuation.
Pitfalls to avoid
- Levels are mechanical and may not match real supply or demand.
- Different pivot methods give different levels.
- Less useful for long-term investing.
FAQ
Why are pivot points popular?
They are objective, easy to calculate and widely watched by short-term traders.
What timeframe do pivots use?
Daily pivots use the prior day; weekly and monthly pivots use those periods.
Are there different types?
Yes, including classic, Fibonacci, Camarilla and Woodie pivots.
Works well with
Volume Weighted Average Price
VWAP is the average price of the session weighted by how much volume traded at each price. Intraday traders use it as a fair-value reference and a key support or resistance line.
🐚Fibonacci Retracement
Fibonacci retracement draws horizontal levels between a swing high and swing low at key ratios. Traders watch these levels as possible areas where a pullback might pause or reverse.
📊Volume
Volume shows how many shares, contracts or coins traded during each period. It reveals the level of participation behind a price move and helps judge whether a move has conviction.