Pivot Points: levels computed from yesterday, traded today

What it measures

Pivot points derive a central level and a set of supports and resistances from the previous period’s high, low and close. The arithmetic is trivial and fixed, which is the point.

Their value comes from being watched. Because every platform computes the same levels from the same data, a great many participants are looking at the same prices — and that concentration is what makes them react.

They are not predictive. They are coordination points.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   The pivot is the average of the previous period’s high, low and close.

2. 2

   The first resistance is twice the pivot minus the low; the first support is twice the pivot minus the high.

3. 3

   The second resistance is the pivot plus the previous range; the second support is the pivot minus it.

4. 4

   Further levels extend the same pattern outward.

Settings

The variants — standard, Fibonacci, Camarilla, Woodie — differ in how the supports and resistances are spaced from the pivot, not in the pivot itself. Standard is the most widely watched, which for this particular tool is the strongest argument: a level works here because people are looking at it, so the popular variant is the effective one.

How to read it

• Price opening above the pivot and holding is a conventional bullish session read.
• The first support and resistance see the most reaction, because they are the levels most likely to be reached within a session.
• The levels are static for the whole period, which makes them useful for planning before the session rather than reacting during it.
• A wide previous range pushes the outer levels far apart, so pivots computed after a violent session are spaced too widely to be reached.

Where it misleads

Related indicators