Pivot points
Auto-drawn support and resistance for the day
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Drawing support and resistance by hand takes judgement. Pivot points skip the judgement: a formula produces the levels from yesterday, and the whole room is looking at the same lines.
Orange Put here. 📐 Pivots are support and resistance with the homework already done. A short formula takes the previous session's price action and prints a set of levels for today. Day traders load them before the open and read them like a map of the session ahead.
The central pivot
Everything hangs off one number. Take the prior period's High, Low and Close and average them:
PP = (High + Low + Close) ÷ 3
That single level is the balance point for today — the market's rough idea of "fair", carried over from the last session. Every other pivot level is measured off it.
It is the central pivot, the day's balance line. It is built from the PRIOR period's high, low and close — never today's. And it is a simple average, which is exactly why everyone can compute the same one.
Levels above and below
From the pivot, the formula projects resistance levels above (R1, R2) and support levels below (S1, S2). Price often stalls, bounces or accelerates as it reaches them.
R1 and S1 tend to matter most simply because they sit closest to the action — most sessions never reach R2 or S2 at all, and the ones that do are usually trending hard.
Trading above the PP leans bullish; below it leans bearish. Many day traders use nothing more than that — one line in the sand that decides which direction they are willing to take trades in today.
A quick number
Say yesterday printed a High of 105, a Low of 99 and a Close of 102.
Add them: 105 + 99 + 102 = 306. Divide by three and your pivot for today is 102. So this morning, trading above 102 leans bullish and below 102 leans bearish, and you would watch R1 above and S1 below for the first reactions.
That took ten seconds and it is the same 102 that every other pivot trader in the market just calculated. Which is the actual point.
Why they work
There is nothing mystical in the arithmetic. Pivots work to the extent that they do because a large number of traders — and a lot of automated systems — watch the same levels and place orders around them. The lines become meaningful because they are crowded.
Use them on liquid markets, where the crowd is big enough for the self-fulfilling effect to exist, and treat them as confluence: a pivot that lands on a level you had already drawn by hand is worth far more than one sitting alone.
One formula, one balance line, and a map of the session before it starts. 🗺️