Pivot Point Calculator

What a pivot point is

There exists an historic method for determining a central price level for each trading session. This was initially used by floor traders as a simple mathematical formula to determine a center of gravity using the high, low and closing prices from the preceding trading session. The formula would then provide support/resistance levels which were expected to be areas where price action was likely to either reverse direction or experience some form of congestion. No predictive element existed within the mathematics; however, the benefits arose due to the fact that the resulting price levels were both static and known by many participants. As such, you were able to watch these levels with many other traders. Simply enter the prior session's High, Low and Close into the input fields and you will have all of the Support/Resistance Levels generated utilizing this method presented side-by-side in one location.

The formulas

Classic P = (H+L+C)/3 · R1 = 2P−L · S1 = 2P−H · R2 = P+(H−L) · S2 = P−(H−L) · R3 = H+2(P−L) · S3 = L−2(H−P)

Fibonacci P = (H+L+C)/3 · R1/S1 = P ± 0.382(H−L) · R2/S2 = P ± 0.618(H−L) · R3/S3 = P ± 1.000(H−L)

Camarilla R1/S1 = C ± (H−L)×1.1/12 · R2/S2 = C ± (H−L)×1.1/6 · R3/S3 = C ± (H−L)×1.1/4 · R4/S4 = C ± (H−L)×1.1/2

Woodie P = (H+L+2C)/4 · R1 = 2P−L · S1 = 2P−H · R2 = P+(H−L) · S2 = P−(H−L)

A worked example

Take a session where the low was 1.0950 and high was 1.1050 with a closing price of 1.1020. The traditional pivot point for this session is (1.1050 + 1.0950 + 1.1020)/3 = 1.10067. The first resistance area is 2*1.10067 - 1.0950 = 1.10633 while the first support area will be 2 * 1.10067 - 1.1050 = 1.09633. Observe that the pivot has been located beneath the session's closing price: since the session ended up in the upper half of it's trading range, then you should expect that price to open higher than the pivot the next trading session as an arithmetic expectation rather than a bullish sign. This type of detail is one of many things you need to know prior to making conclusions about levels.

Compare the methods on the same numbers and the difference in character is obvious. Camarilla's R1 and S1 sit far closer to the close than Classic's, because they are scaled fractions of the range rather than reflections of it, which is why Camarilla suits traders fading small moves while Classic suits those trading breaks of wider structure.

Central pivot range and the other variants

Beyond the four methods listed in the table, there are two systems whose names appear frequently. The central pivot range (CPR) system uses two additional horizontal lines to wrap the basic pivot line: Bottom-Central BC = (H + L)/2; Top-Central TC = Pivot + (Pivot – BC); The distance from these two lines indicates the direction of the market (trend or range): a small gap between the two lines indicates a "Trend Day", while a large gap represents a "Range Day". The second system mentioned here is DeMark, which generates different calculations based upon where the closing price ended relative to opening price, thus the need for an inputted Open Price by the user. There also exist Gann type systems as well as other types of trader-based systems. However, since the majority of all charting platforms only have built-in Classic, Fibonacci, Camarilla and Woodie Levels (the four most common), it is generally worthwhile for you to pay attention to these levels because part of their advantage is due to the fact that nearly everyone can see them.

Using levels without fooling yourself

Pivots are predetermined horizontal lines and the advantage of using them is that you have a chance to make a decision about action prior to a trading opportunity occurring while you are still calm as opposed to during the trade when you are not. Draw the lines, identify what action you want to take at each line, then allow the plan to execute itself. The one thing that pivots can't provide is the amount or lot sizes of the position that you are going to be entering. That comes from identifying how close your stops are to the pivot levels and converting that distance into lot sizes by utilizing the position size calculator. The second part of determining whether an entry is worthwhile based on potential reward versus total risk is provided by the risk/reward calculator. Levels represent structure. Sizing and discipline provide the edge.

Any market, any timeframe

The formula cares not about your input data so the same three inputs will work for forex pairs, gold & crude oil, indices (Nifty), crypto, etc. It only matters that you change the period of time from which you are taking high, low and close levels. This determines whether the level is good to use in which trading session: intraday/day trading with previous day's numbers; swing trades using previous week's numbers; position trades using previous month's numbers. Daily pivot levels become stale by next days session openings. Therefore re-run the formula each session using fresh numbers off your own chart.