How to Use Pivot Point Support and Resistance Formula:

Pivot points, along with support and resistance levels, are essential tools for traders and investors to make informed decisions in financial markets. They help identify potential price levels at which an asset may change direction. Here's how to use the pivot point support and resistance formula:

Step 1: Gather Data

To calculate pivot points, you'll need the following data:

• High (H): The highest price the asset reached during the chosen timeframe.
• Low (L): The lowest price the asset reached during the chosen timeframe.
• Close (C): The closing price of the asset for the chosen timeframe.

Step 2: Select a Formula

There are different formulas for calculating pivot points, including:

• Classic: The most widely used formula. It calculates the average of high, low, and close prices for the chosen timeframe.
• Woodie: This formula considers the close price, but it gives more weight to the open price.
• Fibonacci: This formula incorporates Fibonacci ratios into the calculation.

Choose the formula that aligns with your trading strategy or preference.

Step 3: Determine the Timeframe

Decide on the timeframe for which you want to calculate pivot points. You can choose from:

For Example: To calculate the closing price for weekly and monthly pivot points, you would simply use the high, low, and close prices for the week or month, respectively from the chart for the time period selected. For example, to calculate the monthly Fibonacci pivot points for September 2023, you would use the high, low, and close prices for all of the trading days in September 2023.

• Daily: Use daily high, low, and close prices for intraday trading.
• Weekly: Use weekly high, low, and close prices for a longer-term perspective.
• Monthly: Use monthly high, low, and close prices for even longer-term analysis.

Step 4: Calculate Pivot Points

Plug the selected formula, along with the high (H), low (L), and close (C) prices for the chosen timeframe, into the formula. Use the formula-specific calculations for each of the following levels:

• Resistance Level 3 (R3)
• Resistance Level 2 (R2)
• Resistance Level 1 (R1)
• Pivot Point (PP)
• Support Level 1 (S1)
• Support Level 2 (S2)
• Support Level 3 (S3)

Step 5: Interpret the Results

Once you've calculated these levels, you can interpret them as follows:

• Resistance Levels: These are potential price levels above the pivot point where the asset might face selling pressure or reversals.
• Pivot Point: This is a crucial level that signifies a potential change in market sentiment. If the price is above the pivot point, it's considered bullish; if it's below, it's bearish.
• Support Levels: These are potential price levels below the pivot point where the asset might find buying support or reversals.

Step 6: Use in Trading

Incorporate these levels into your trading strategy. For example, some traders buy when the price is near support levels and sell when it approaches resistance levels. Pivot points can also help set stop-loss and take-profit orders.

Remember that pivot points are just one tool in your trading toolbox. They work best when used in conjunction with other technical and fundamental analysis techniques to make well-informed trading decisions.

By following these steps and understanding the calculated pivot points, you can gain insights into potential price movements and make more informed trading decisions for daily, weekly, or monthly trading timeframes.

Formula Notes for Calculating Pivot Points for Different Timeframes:

When calculating pivot points for daily, weekly, or monthly timeframes, you need to use specific high (H), low (L), and close (C) prices for the selected period. Here are the formula notes for each timeframe:

1. Daily Pivot Points:

• High (H): Use the highest price reached during the trading day.
• Low (L): Use the lowest price reached during the trading day.
• Close (C): Use the closing price at the end of the trading day.

Formulas: Classic:

• Pivot Point (PP) = (H + L + C) / 3
• Resistance Level 1 (R1) = (2 * PP) - L
• Resistance Level 2 (R2) = PP + (H - L)
• Resistance Level 3 (R3) = H + 2 * (PP - L)
• Support Level 1 (S1) = (2 * PP) - H
• Support Level 2 (S2) = PP - (H - L)
• Support Level 3 (S3) = L - 2 * (H - PP)

Woodie:

• Pivot Point (PP) = (H + L + 2 * C) / 4
• Resistance Level 1 (R1) = 2 * PP - L
• Resistance Level 2 (R2) = PP + H - L
• Resistance Level 3 (R3) = H + 2 * (PP - L)
• Support Level 1 (S1) = 2 * PP - H
• Support Level 2 (S2) = PP - (H - L)
• Support Level 3 (S3) = L - 2 * (H - PP)

Fibonacci:

• Pivot Point (PP) = (H + L + C) / 3
• Resistance Level 1 (R1) = PP + (H - L) * 0.382
• Resistance Level 2 (R2) = PP + (H - L) * 0.618
• Resistance Level 3 (R3) = PP + (H - L) * 1.000
• Support Level 1 (S1) = PP - (H - L) * 0.382
• Support Level 2 (S2) = PP - (H - L) * 0.618
• Support Level 3 (S3) = PP - (H - L) * 1.000

2. Weekly Pivot Points:

• High (H): Use the highest price reached during the trading week.
• Low (L): Use the lowest price reached during the trading week.
• Close (C): Use the closing price at the end of the trading week.

Note: The formulas for weekly pivot points are the same as the daily formulas, but you use weekly high, low, and close prices.

3. Monthly Pivot Points:

• High (H): Use the highest price reached during the trading month.
• Low (L): Use the lowest price reached during the trading month.
• Close (C): Use the closing price at the end of the trading month.

Note: The formulas for monthly pivot points are also the same as the daily formulas, but you use monthly high, low, and close prices.

These notes clarify which price data to use for each timeframe and provide the formulas for calculating pivot points, resistance levels, and support levels for daily, weekly, and monthly analysis.

Disclaimer:

Trading in financial markets involves a significant level of risk. It is important to understand that past performance is not indicative of future results, and there are no guarantees of profit when engaging in trading activities. The information provided here is for educational and informational purposes only and should not be considered as financial advice.

Before making any trading decisions, it is recommended that you carefully consider your financial situation, risk tolerance, and investment goals. You should also be aware of the potential for loss, and only trade with funds that you can afford to lose. It is advisable to consult with a qualified financial advisor or conduct your own research before entering into any trading transactions.

Trading can result in substantial financial losses, and you should be prepared to accept the associated risks. It is your sole responsibility to make informed trading decisions and to manage your investments in a manner that aligns with your individual financial objectives.

By using the information provided here, you acknowledge and accept the inherent risks associated with trading in financial markets, and you agree that neither the creators of this content nor any affiliated parties can be held responsible for any trading losses or financial damages that may occur.