What is the Pivot Points Indicator?
The Pivot Points Indicator is a support and resistance tool that plots pre-calculated horizontal levels from the prior session’s high, low, and close. It appears on the main price chart as a central pivot (PP) plus upside resistance levels (R1, R2, R3) and downside support levels (S1, S2, S3). Traders use these levels as an intraday map for where price often stalls, reverses, or breaks out, with PP commonly treated as a session “balance” line.
How is the Pivot Points Indicator Calculated?
The Pivot Points Indicator starts with the central pivot, then builds support and resistance levels from PP and the prior session’s range.
PP = (High + Low + Close) / 3
R1 = (2 × PP) − Low
S1 = (2 × PP) − High
R2 = PP + (High − Low)
S2 = PP − (High − Low)
R3 = High + 2 × (PP − Low)
S3 = Low − 2 × (High − PP)
The inputs are the previous period’s High, Low, and Close, with the “period” typically set to daily pivots for intraday trading (platforms often let you switch to weekly or monthly).
How to Use the Pivot Points Indicator in Trading?
To use pivot points in trading, treat PP, R-levels, and S-levels as decision zones and trade the market’s reaction (rejection or acceptance) at those lines. The mechanism is simple: when price repeatedly fails at a pivot level, order flow is absorbing; when it holds above/below a level and pushes away, momentum is in control.
Trend bias with PP: Price holding above PP supports long setups; price holding below PP supports short setups.
Reversal trades at S/R: Look for price to tag S1/S2 or R1/R2 and then print a clear rejection (wick + close back inside the level) before entering.
Breakout trades through S/R: Enter after a clean close beyond R1/S1 and a hold (retest acceptance) to avoid wick breaks.
Targets and stops: Use the next pivot level as the first target (S1 to PP, PP to R1), and place stops beyond the level that invalidates the idea (below S1 for longs, above R1 for shorts).
Confluence filter: Prioritize trades where a pivot level aligns with a prior swing high/low, VWAP, or a key moving average, since confluence tightens the “line in the sand.”