Pivot Points

Pivot Points are horizontal lines that plot the average of a company’s most recent High, Low and Closing price. They also overlay a series of support and resistance levels. In the image below, the top red lines represent resistance, while the bottom green levels represent support. The white line in the middle is the Pivot Point.

The support and resistance levels are plotted using the following calculations:

• P = Price

• First resistance level (R1) = (P x 2) - L

• First support level (S1) = (P x 2) - H

• Second resistance level (R2) = P + (H - L) = P + (R1 - S1)

• Second support level (S2) = P - (H - L) = P - (R1 - S1)

• Third support level (S3) = P – 2 x (H - L)

• Third resistance level (R3) = P + 2 x (H – L)

  Where H, L, C are the previous period’s high, low and close and P is the Pivot Point Value.