PivotsPivot Points

What is Pivots?

Pivot Points originated on physical trading floors in the early 20th century. Pit traders needed quick reference levels without computers, so they used simple formulas involving the prior day's high, low, and close to project today's likely turning points.

The central Pivot Point (PP) is the average of the prior period's high, low, and close. From PP, three resistance levels (R1, R2, R3) and three support levels (S1, S2, S3) are calculated. The system survives because so many traders watch the same levels — they become self-fulfilling intraday reference points.

Category

Support / resistance levels

Default settings

Prior day / week / month

Signal range

Discrete levels

Introduced by

Floor traders, 1900s; popularized in retail 1990s

How Pivots works

Classic (Floor) formula:

PP = (Prior High + Prior Low + Prior Close) / 3 R1 = (2 * PP) - Prior Low R2 = PP + (Prior High - Prior Low) R3 = Prior High + 2 * (PP - Prior Low) S1, S2, S3 = mirror formulas below PP

Variants include Fibonacci pivots (using fib ratios for spacing), Camarilla pivots (closer-together levels for scalping), and Woodie pivots (which weight the close more heavily). The Classic / Floor formula is the most widely-watched and therefore the most useful self-fulfilling level.

How to use Pivots

Three practical applications.

1. Bias from PP: Trading above the central PP = bullish bias for the day. Below = bearish. Simple but useful for filtering counter-trend setups.

2. R1 / S1 reactions: First-touch reactions at R1 and S1 are typically tradeable as mean-reversion setups in a range. In a strong trend, R1 (or S1) often becomes the launching pad for continuation moves rather than a reversal.

3. R2 / S2 = trend acceleration: Breaking R2 or S2 usually means a sustained directional move. R3 / S3 are reached only on outlier days — useful as profit targets or stop-out warnings.

Daily Pivots are best for intraday trading. Weekly Pivots are useful for swing context. Monthly Pivots are a long-term reference.

Want more practical context? Look up unfamiliar terms in the forex glossary, or see how indicators stack on real charts in the trading blog.

Pivots FAQ