ES Wednesday 10-26-16 : Hot Topic

Calculating Pivot Points

How to calculate Pivot Points

How are Pivot/Resistance/Support Points and Levels Calculated?

One of the best ways to see how pivots points and the subsequent support and resistance levels are calculated is to go off an play with this online pivot calculator . That online pivot calculator allows you to try different formulae by clicking on drop down combo boxes and includes every type of pivot point, resistance and support formula that the author could find. The online calculator also shows the formula next to the results so if you print it out you can see which formula was used for which calculation.

The Classic Formulae

PP = (HIGH + LOW + CLOSE) / 3 S1 = (2 * PP) - HIGH S2 = PP - RANGE S3 = S2 - RANGE R1 = (2 * PP) - LOW R2 = PP + RANGE R3 = R2 + RANGE

Calculating the Pivot Point

The classic calculation for the pivot point is pathetically simple. It's the average of the high, low, and close for the previous day. This classic formula uses the high, low and close from the pit traded session which is also commonly know as the Regular Trading Hours (RTH) session. This time period is used because when pivots were first created this is what the floor traders used.

There are now many variations on this formula. All of the variations that I've seen involve an average of a set of prices that include a combination of yesterday's open/high/low/close and today's open. If you limit the input to those 5 figures then there will be a finite number of ways that you can calculate a pivot point based on all the permutations of those 5 figures that you can come up with.

Calculating the support and resistance levels

All of the support and resistance levels are calculated off the pivot point. The pivot point is always the start of these calculations. The classic formulae shown above will allow you to calculate the most common support and resistance levels.

To see other formulae that have been found and used then take a look at the online pivot calculator and use the drop down boxes to see the different formulae. The reason that I refer you to this calculator instead of listing the variations here is because if another formula comes to light then it will be listed here in the options and may not be updated on this page - and I want you to have the latest and most up-to-date information.