Pivot points explained: the levels day traders watch

Pivot points are one of the oldest tools in day trading. They're calculated from the previous day's prices, so everyone who uses the same formula sees the same levels. That shared view is a large part of why they matter.

The classic formula

Take the previous day's high (H), low (L) and close (C):

• Pivot (P) = (H + L + C) ÷ 3
• R1 = 2 × P − L
• S1 = 2 × P − H
• R2 = P + (H − L)
• S2 = P − (H − L)
• R3 = H + 2 × (P − L)
• S3 = L − 2 × (H − P)

R stands for resistance and S for support.

A worked example

Say EUR/USD's high yesterday was 1.0900, the low 1.0800 and the close 1.0870. Then:

• Pivot: 1.0857
• R1: 1.0913, R2: 1.0957, R3: 1.1013
• S1: 1.0813, S2: 1.0757, S3: 1.0713

The calculator below works these out instantly, and also gives the Woodie, Camarilla and Fibonacci variations.

Which daily close?

Forex trades around the clock, so "yesterday" depends on when your broker's day ends. Most use 5 p.m. New York time as the daily close, which matches the main market rollover. If your broker's server uses a different time zone, its daily candles, and so its pivots, can differ from someone else's. Use a broker whose daily candle closes at 5 p.m. New York, or calculate pivots from those prices yourself.

How traders use pivots

• Daily bias. Price trading above the pivot suggests buyers are in control for the day, and below it, sellers. It's a rough guide, not a rule.
• Targets. If you buy near S1, the pivot is a natural first target and R1 a second.
• Stops. A buy at S1 might use a stop beyond S2, since a clean break of S2 suggests the day has turned against you.
• Ranges vs trends. On quiet days, price often swings between S1 and R1. On trending days, it can run through R1 or S1 and keep going. Know which kind of day you're in before you fade a level.

Variations

• Woodie pivots give more weight to the close.
• Camarilla pivots produce tighter levels around the close, popular for range trading.
• Fibonacci pivots space the support and resistance levels using Fibonacci ratios of the previous day's range. See our Fibonacci guide.

None of them is better in general. Pick one and learn how price behaves around it on the pair you trade.

Keep expectations realistic

Pivot levels are reference points, not predictions. Price reacts at them often enough to be useful for planning, but it will also cut straight through them, especially around news. Use them to decide where your stop and targets go, then size the trade so the stop costs what you planned, with the position size calculator.

Risk note: trading forex carries a high level of risk and may not be suitable for everyone. This article is for education only and is not financial advice.