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Pivot Points: Pivot Point Formula for Support and Resistance Levels

Classic floor-trader pivot points: how P, R1–R3 and S1–S3 are calculated from a session's high, low and close for the next session.

Reviewed · Sources at the end · How Vyreon measures
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Pivot points are price levels calculated from one session's high, low and close, used as reference levels for the next session. The classic "floor-trader" version gives a central pivot (P), three resistance levels above it (R1–R3) and three support levels below it (S1–S3). They are a long-standing convention for marking support and resistance levels.

Pivot Point Formula

With H, L and C as today's high, low and close:

  • 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)

The pivot is the session's typical price. R1 and S1 reflect the pivot off the day's low and high; R2 and S2 add or subtract the full day's range; R3 and S3 extend further.

Illustrative example: with a high of 105, a low of 95 and a close of 102, the pivot is 100.67. R1 = 106.33, R2 = 110.67, R3 = 116.33, S1 = 96.33, S2 = 90.67, S3 = 86.33.

Support And Resistance Levels

"Support" and "resistance" are trading terms for prices where a decline or rally is expected to pause. Pivot points supply such levels mechanically, which is part of their appeal: everyone using the same formula draws the same lines. Some traders treat the area around P as the dividing line for the session.

How Vyreon Calculates Them

Vyreon computes classic floor-trader pivots after each session from that session's high, low and close, and labels them as levels for the next session. The latest session's bar is the reference point for Vyreon's split and dividend adjustment, so these are the session's actual traded prices. Vyreon uses only the classic formula, not the Fibonacci, Camarilla, Woodie or DeMark variants.

What Pivot Points Do Not Tell You

  • They are arithmetic on one day's prices, not measurements of supply or demand.
  • Markets do not have to respect them. Any tendency for prices to react near these levels is not an established rule; where it appears, it may partly reflect traders acting on the same lines.
  • They are not targets or forecasts, and they say nothing about direction.

Related: Fibonacci retracement · price channels · candlestick patterns · ATR

Sources

  • John J. Murphy, Technical Analysis of the Financial Markets (New York Institute of Finance, 1999): support and resistance as charting concepts.
  • Carol L. Osler, "Support for Resistance: Technical Analysis and Intraday Exchange Rates", Federal Reserve Bank of New York Economic Policy Review (2000): found that support and resistance levels published by firms helped predict intraday trend interruptions in currencies, with predictive power varying across currencies and firms. It did not study floor-trader pivot points.

Floor-trader pivot points are a market convention with no single originator; we know of no peer-reviewed source establishing them.