Free Trading School · Level 9: Key Levels and Multiple Timeframes
Pivot points
Pivot points are levels calculated from the previous period's high, low and close. Day traders use daily pivots; swing traders use weekly or monthly ones. Because the formula is public and identical everywhere, thousands of traders watch the same levels.
| Level | Formula (standard pivots) |
|---|---|
| Pivot (P) | (High + Low + Close) ÷ 3 |
| R1 | 2 × P − Low |
| S1 | 2 × P − High |
| R2 | P + (High − Low) |
| S2 | P − (High − Low) |
Yesterday a stock traded between $48 and $52 and closed at $51. P = (52 + 48 + 51) ÷ 3 = $50.33. R1 = 2 × 50.33 − 48 = $52.67. S1 = 2 × 50.33 − 52 = $48.67.
- Price above P: intraday bias is bullish; below P: bearish.
- R1/S1 are common first targets for day trades.
- Pivots matter most in liquid markets like index futures and major currency pairs.
Pivots give you objective levels before the session starts. Plan your trades around them, then watch how price reacts.
Quick answers
Pivot points are levels calculated from the previous period's high, low and close. Day traders use daily pivots; swing traders use weekly or monthly ones. Because the formula is public and identical everywhere, thousands of traders watch the same levels.
Pivots give you objective levels before the session starts. Plan your trades around them, then watch how price reacts.
$50.33. (52 + 48 + 51) ÷ 3 = 50.33.
Next lesson: Round numbers and psychological levels