Pivot Points are significant price levels traders can use to determine market direction and potential support/resistance levels. They are calculated using High, Low, Close values of previous period (day, week, month, year).
In general we can say that: if the market, in the period following the calculation, trades above the pivot point (yellow line), its direction is probably bullish, while if it trades below the pivot point it is bearish. Resistance/Support levels represent possible reversal points.
Calculation Properties #
Formula Type: specifies which formula to use for calculating Pivot Points (see available formulas below).
Time Range: By choosing Type and Units appropriately, you can calculate Pivot Points at daily, weekly, monthly and yearly intervals. For example, to calculate daily Pivot Points for a total of 5 days (as in the image above), select Type = ‘Last x Days’ and Units = 5. To calculate weekly Pivot Points for a total of 4 weeks, select Type = ‘Last x Weeks’ and Units = 4.
Formulas #
Several formulas are available for calculating Pivot Points: Classic, Camarilla, Demark, Fibonacci and Woodie.
Below is the detail of available formulas:
Classic #
R4 = R3 + (H – L)
R3 = PP – S2 + R2
R2 = PP – S1 + R1
R1 = 2 * PP – L
PP = (C + H + L) / 3
S1 = 2 * PP – H
S2 = PP – (R1 – S1)
S3 = PP – (R2 – S2)
S4 = S3 – (H – L)
Camarilla #
R4 = C + (H – L) * 1.1 / 2
R3 = C + (H – L) * 1.1 / 4
R2 = C + (H – L) * 1.1 / 6
R1 = C + (H – L) * 1.1 / 12
PP = (C + H + L) / 3
S1 = C – (H – L) * 1.1 / 12
S2 = C – (H – L) * 1.1 / 6
S3 = C – (H – L) * 1.1 / 4
S4 = C – (H – L) * 1.1 / 2
Demark #
IF (C < O)
X = H + 2 * L + C
ELSEIF (C > O)
X = 2 * H + L + C
ELSE
X = H + L + 2 * C
R1 = X / 2 – L
PP = X / 4
S1 = X / 2 – H
Fibonacci #
R3 = PP + 1 * (H – L)
R2 = PP + 0.618 * (H – L)
R1 = PP + 0.382 * (H – L)
PP = (C + H + L) / 3
S1 = PP – 0.382 * (H – L)
S2 = PP – 0.618 * (H – L)
S3 = PP – 1 * (H – L)
Woodie #
R4 = R3 + (H – L)
R3 = H + 2 * (PP – L))
R2 = PP + (H – L)
R1 = 2 * PP – L
PP = (H + L + 2 * O) / 4
S1 = 2 * PP – H
S2 = PP – (H – L)
S3 = L – 2 * (H – PP)
S4 = S3 – (H – L)
