Pivot points are one of the oldest and most reliable tools for intraday traders. They identify key price levels that institutions watch, making them self-fulfilling prophecy zones.
How Pivot Points Are Calculated
Pivot (PP) = (High + Low + Close) / 3
R1 = (2 × PP) - Low
R2 = PP + (High - Low)
R3 = R1 + (High - Low)
S1 = (2 × PP) - High
S2 = PP - (High - Low)
S3 = S1 - (High - Low)
What Each Level Means
| Level | Meaning | Trading Action |
|---|---|---|
| R3 | Extreme resistance | Fade or wait |
| R2 | Strong resistance | Take profit / watch for reversal |
| R1 | First resistance | Potential short entry |
| PP | Pivot — equilibrium | Decisive level; breakout or reversal |
| S1 | First support | Potential long entry |
| S2 | Strong support | Take profit / watch for bounce |
| S3 | Extreme support | Reversal zone or breakdown |
Intraday Trading Strategy
Scenario: Bullish Break Above Pivot
- Price opens above daily PP
- Retests PP and holds
- Enter long targeting R1
- Stop loss below PP
Scenario: Bearish Rejection at R1
- Price spikes to R1
- Forms a shooting star on the 15-min chart
- Enter short targeting PP
- Stop loss above R1
Pro Tips
- Pivot points work best in range-bound markets and during high liquidity sessions
- Combine with session volume — high volume at PP = stronger reaction
- Use weekly pivot points for swing trading context
- Don't trade at the pivot level — wait for confirmation (retest/candle close)
A simple pivot-based system can keep you disciplined and out of no-trade zones.
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