Pivot Points: Key Levels for Day Trading
Pivot points calculate support and resistance from the previous day's high, low, and close. Learn how day traders use these levels. Classic, Fibonacci and.
What Are Pivot Points?
Pivot points are calculated levels of support and resistance derived from the previous trading period's high, low, and close. They provide objective price levels that many traders watch, creating self-fulfilling reactions.
Calculation
Pivot = (Previous High + Previous Low + Previous Close) / 3. Support: S1 = 2×Pivot - High, S2 = Pivot - (High - Low), S3 = Pivot - 2×(High - Low). Resistance: R1 = 2×Pivot - Low, R2 = Pivot + (High - Low), R3 = Pivot + 2×(High - Low).
Trading Strategies
- Breakout: Price breaks above R1 with volume — target R2
- Bounce: Price bounces off Pivot — trade toward R1 or S1
- Reversal: Price reaches R2/S2 and reverses — fade the move toward Pivot
Which Pivot Type to Use
- Standard: Most common, suitable for most instruments
- Fibonacci: Adds Fibonacci levels to pivots
- Camarilla: More levels, better for ranging markets
- Woodie: Gives more weight to close price
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.