Pivot Point Trading

By definition, a pivot point is a point of rotation. The prices used to calculate the pivot point are the previous period's high, low and closing prices for a security. These prices are usually taken from a stock's daily charts, but the pivot point can also be calculated using information from hourly charts. Most traders prefer to take the pivots, as well as the support and resistance levels, off of the daily charts and then apply those to the intraday charts (for example, hourly, every 30 minutes or every 15 minutes). If a pivot point is calculated using price information from a shorter time frame, this tends to reduce its accuracy and significance.

In order to calculate pivot level, we need 3 prices which are:

H = previous period’s high price

L = previous period’s low price

C = previous period’s closing price

Then calculate pivot level using this equation:
Pivot Point (PP) = (High + Low + Close) / 3

Support and resistance levels are then calculated off of this pivot point using the following formulas:

Resistance:

R1 = Resistance Level 1 = (2*PP)-L

R2 = Resistance Level 2 = (PP-S1) + R1

R3 = Resistance Level 3 = (PP-S2)+R2

Support:

S1 = Support Level 1 = (2*PP)-H

S2 = Support Level 2 = PP - (R1 - S1)

S3 = Support Level 3 = PP - (R2-S2)



For Intra Day and EOD Auto Refresh Excel Sheet Download Intra Pivots for Nifty 50 Stocks


Regards,
Bramesh