What is the Pivot Points Indicator?
The Pivot Points Indicator is a support and resistance tool that plots horizontal levels on your chart from yesterday's high, low, and close. You get a central pivot (PP), three resistance levels above it (R1, R2, R3), and three support levels below it (S1, S2, S3).
PP acts as the session's center of gravity. Price above it signals a bullish bias for the day. Price below it signals a bearish bias. The R and S levels are where price stalls, rejects, or breaks through — your decision zones.
How is the Pivot Points Indicator Calculated?
The math is simple. You need three numbers from yesterday's session: the High, the Low, and the Close. Everything else builds from there.
The formulas:
- 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)
Every charting platform calculates it for you. Pick the timeframe. Daily pivots are standard for intraday trading. Switch to weekly or monthly for swing trading.
How to Use the Pivot Points Indicator in Trading?
Treat pivot levels as decision zones. Your job is to read what price does when it reaches a level. Rejection means trade the bounce. A clean break and hold means trade the continuation. No reaction means stand aside.
How the levels work in live trading:
- Trend bias with PP: Price holding above PP means look for longs. Holding below means look for shorts. Don't fight the bias.
- Reversal trades at S/R: Wait for price to tag S1/S2 or R1/R2 and print a rejection — wick into the level, close back inside. No rejection candle, no trade.
- Breakout trades through S/R: Enter on a clean close beyond R1/S1 plus a retest that holds. Skip the wick breaks — they trap you.
- Targets and stops: The next pivot level is your first target (S1 to PP, PP to R1). Place stops beyond the level that invalidates your idea — below S1 for longs, above R1 for shorts.
- Confluence marks the A+ setups: A pivot level lining up with a prior swing point, VWAP, or the 20 EMA tightens the level. Trade those. Skip the lonely pivots.