How this instrument works
A pivot point is the average of a prior trading session's high, low, and close — a single price meant to summarize where that session settled its business. Floor traders on pit-based exchanges calculated it by hand before the opening bell, because it needed no chart and no subjective judgment: feed in the same three numbers everyone already had from the previous day's tape, and everyone on the floor arrived at the identical figure. That objectivity is the whole appeal — two traders looking at the same prior session compute the exact same PP, R1, S1, R2, and S2, unlike a Fibonacci retracement, where two people can mark a different swing high and low on the same chart and get different answers.
The four levels built around PP follow a strict pattern rather than a guess. R1 and S1 mirror PP by doubling it and subtracting the opposite extreme, which places them roughly as far from PP as the prior low sat from the prior high. R2 and S2 instead add or subtract the entire prior range from PP itself, pushing them further out again. A session that closed near its own high produces a PP pulled upward and a tighter gap between PP and resistance than between PP and support — an asymmetry intraday traders read as a clue about which side controlled the previous session.
None of this looks forward. Every input comes from a session that has already closed, so the five levels say nothing about overnight news, a gap at the open, or a shift in volume — they are a fixed map drawn from where price already went, not a forecast of where it has to go next. Treating R1 as a ceiling certain to cap a rally, or S1 as a floor certain to hold a decline, confuses a widely watched reference point with a guarantee the arithmetic never made; the formula only describes the prior range, not tomorrow's participants.
- Enter Previous period high, $ — the highest traded price of the session you are basing the pivot on.
- Enter Previous period low, $ — the lowest traded price of that same session.
- Enter Previous period close, $ — the price the session settled at.
- Read Pivot point (PP) — the reference level the other four levels are built around.
- Compare Resistance 1 (R1), Support 1 (S1), Resistance 2 (R2), and Support 2 (S2) against where the instrument is trading now.
Worked example — a $110 high, $100 low session
Take a session with a $110 high, a $100 low, and a $105 close — a $10 range that happened to close exactly in its own middle. Averaging the three figures gives PP = (110 + 100 + 105) ⁄ 3 = 105.00 exactly, landing precisely on the close because the close sat at the session's midpoint.
R1 = 2 × 105 − 100 = 110.00, the same price as the prior high, and S1 = 2 × 105 − 110 = 100.00, the same price as the prior low. R2 = 105 + (110 − 100) = 115.00 and S2 = 105 − (110 − 100) = 95.00, each sitting exactly one prior range's width beyond PP. A day trader watching the next session would treat 110 and 115 as levels where a rally might stall, and 100 and 95 as levels where a decline might find buyers — five numbers, all traceable back to yesterday's three prices with nothing else added.
Questions
What period should 'previous period' be — a day, an hour, a week?
Whatever session length matches your trading horizon. Day traders typically feed in the prior full trading day's high, low, and close to set levels for the next session, while someone working five-minute charts might use the prior hour instead. The formula itself never changes — only which bar you enter into Previous period high, $, Previous period low, $, and Previous period close, $ changes what timeframe the resulting five levels describe.
How is a pivot point different from a Fibonacci retracement level?
A pivot point needs no judgment call — feed in the prior session's high, low, and close and every trader gets the identical PP, R1, S1, R2, and S2. A Fibonacci retracement instead depends on which swing high and swing low a trader marks on a chart, so two people analyzing the same chart can produce two different sets of levels. Pivot points are also always anchored to a fixed prior period, never to a move a trader chose to highlight.
Do prices actually reverse at R1, S1, R2, or S2?
Sometimes, and that is genuinely disputed. The five levels are watched by enough intraday traders that orders cluster near them, which can become partly self-fulfilling, but nothing in the arithmetic forces price to stop there. Treat a level as a place to watch for a reaction, not a wall the market must respect — price crosses pivot levels constantly, especially on news days that break the prior session's pattern entirely.
Why does R1 equal the prior high in the worked example above?
Because R1 = 2·PP − L, and when the close sits exactly at the midpoint of the high and low, PP equals the close and R1 collapses to the same value as the original high — a coincidence of that session's symmetry, not a general rule. Move the close off-center and R1 shifts away from the prior high in either direction, which is the more typical case in real data.
What happens if I enter a low that is higher than the high?
The instrument rejects it, since a session's low price can never exceed its own high by definition — Previous period high, $ must be greater than or equal to Previous period low, $. Check that you copied the two figures from the correct rows of your data source; a swapped high and low is the most common data-entry mistake with this calculator.
Are there other pivot point formulas besides this one?
Yes — Woodie's, Camarilla, DeMark's, and Fibonacci-weighted pivots all start from the same prior high, low, and close but combine them with different multipliers, and some add a third resistance and support level. This instrument computes the classic floor-trader version, the original and still the most widely quoted, using the plain PP, R1, S1, R2, S2 formulas shown above.
References
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.