Pivot points indicator uses high, low and close interest points in order to calculate support and resistance levels. Daily pivot point indicator relies on high, low and close price of previous day in order to calculate support and resistance levels. In order to calculate weekly pivot, high, low and close price of previous week are used, while the same info from previous month are used to calculate monthly pivot.
This indicator is meant to serve day traders who use it to calculate crucial levels throughout the day. Besides daily pivot, weekly and monthly are also considered valuable to traders who use day trading strategy. This is case as daily support and resistance levels are sometimes found close to weekly and monthly pivots.
Standard pivot is calculated in a following way:
Pivot Point (P) = (High + Low + Close)/3
Support 1 (S1) = (P x 2) – High
Support 2 (S2) = P – (High – Low)
Resistance 1 (R1) = (P x 2) – Low
Resistance 2 (R2) = P + (High – Low)
PP — the central axis (any price can perform as it);
R1, R2, R3 — the 1st, 2nd and 3rd levels of resistance;
S1, S2, S3 — the 1st, 2nd and 3rd levels of support;
HIGH — the max price in the previous period of the indicator;
LOW — the min price in the previous period of indicator;
CLOSE — the closing price in the previous period of indicator.
Day Trading And Pivot Points
If you are a day trader then using pivot point indicator is essential to analyzing crucial support and resistance levels. For each technical analysis these specific levels are essential. They indicate the spots where the price is the most likely to reach support or resistance, and this indicator allows you to find these crucial levels timely in order to profit your trades the most.
I have been trading as day trader for twenty years already and I use pivot point indicator in my everyday strategy.
I picked the best pivot point indicators out of my collection that I assembled over the past years. Now you can simply skim through and choose the best and the simplest indicator and download it.