Pivot Points Standard

🔍 What is it?

Pivot Points Standard is a popular technical analysis indicator used to determine potential support and resistance levels based on the previous trading session’s high, low, and close. Originally developed by floor traders, this tool helps traders anticipate where the price might reverse or continue trending. It is especially effective in intraday and short-term trading strategies.

The "standard" version refers to the classic calculation method, which provides a central pivot point along with multiple support (S1, S2, S3) and resistance (R1, R2, R3) levels.

⚙️ How it works

The indicator starts with the central pivot point (P), calculated as:

P = (High + Low + Close) / 3

From this central point, the support and resistance levels are calculated:

• R1 = (2 × P) − Low

• S1 = (2 × P) − High

• R2 = P + (High − Low)

• S2 = P − (High − Low)

• R3 = High + 2 × (P − Low)

• S3 = Low − 2 × (High − P)

These levels act as potential zones where price may experience a bounce or breakout.

📖 How to read it

• Pivot Point (P): Acts as a magnet or gravity level. If the price is above the pivot, it indicates bullish sentiment; below it — bearish sentiment.

• Resistance Levels (R1, R2, R3): These are potential zones where price may face selling pressure.

• Support Levels (S1, S2, S3): These are potential areas where price may find buying interest.

In general:

• Price bouncing off S1 or R1 suggests a continuation within a range.

• Breaking S2 or R2 often signals a stronger trend movement.

⚙️Best settings

There are no parameters to adjust in the Standard version — it relies solely on previous day’s high, low, and close. However:

• For intraday trading, use daily pivots.

• For short-term swing trading, consider weekly pivots.

• For longer-term analysis, use monthly pivots.

Some charting platforms also offer automatic timeframe alignment.

🧠 How to use it in a strategy

1. Bounce Strategy:

• Enter long near S1 with stop loss below S2.

• Enter short near R1 with stop loss above R2.

• Take profit near the pivot point or the opposite level.

2. Breakout Strategy:

• If price breaks and closes above R1 with momentum, enter long aiming for R2.

• If price breaks below S1, short targeting S2.

• Combine with volume indicators or trend filters like MA.

3. Pivot Point Confluence:

• Combine pivot levels with other technical indicators (e.g., RSI or MACD).

• Stronger signals occur when pivot levels align with Fibonacci levels or trendlines.

⚠️ Common mistakes

• Blindly trading every level: Not every touch of S1/R1 is a valid entry. Always confirm with price action or volume.

• Ignoring market context: Pivot levels work best in liquid, trending or range-bound markets — avoid during low volatility or unpredictable news.

• Overloading the chart: Too many indicators can cloud judgment. Keep it simple.

🧠 Final thoughts

Pivot Points Standard is a time-tested tool that brings structure to your trading. Whether you're day trading or swing trading, it provides predefined support/resistance levels to build your strategy around. Use them with proper confirmation and discipline, and they can become a powerful part of your trading toolkit.