What it means
Standard pivots use the previous period's high (H), low (L) and close (C). PP = (H + L + C) / 3. R1 = 2 × PP − L. S1 = 2 × PP − H. R2 = PP + (H − L). S2 = PP − (H − L).
Variants include Fibonacci, Camarilla, Woodie and DeMark pivots.
Why traders use it
Because they are calculated the same way by many platforms, pivots become shared reference levels for the day. Price above PP is read as bullish for the session.
Chart examples
Standard pivots from H = 110, L = 100, C = 106
How to identify it objectively
- 1Fix the session used for H, L, C.
- 2Calculate PP, R1, R2, S1, S2 once per day.
- 3Watch reactions at the levels, especially R1 and S1.
- 4Combine with structure; do not trade every level.
Bullish use
- 1Price above PP.
- 2A pullback to PP holds.
- 3Target R1, then R2.
Bearish use
- 1Price below PP.
- 2A rally to PP fails.
- 3Target S1, then S2.
What confirms it
- A level coincides with structure or liquidity.
What invalidates it
- Closes cutting through several pivots: trend day.
How a hypothetical setup is built
Entry
On a hold at PP with a bullish close.
Stop
Below PP minus a buffer.
Target
R1.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- LiquidityPDH, PDL, PWH, PWL, PMH, PML
- Technical IndicatorsVWAP and Anchored VWAP
- Technical IndicatorsATR (Average True Range)
Historical testing
Not tested on The Tradeskill.
Limitations: when it fails
- Different session definitions give different pivots.
- Trend days ignore them.
- Too many levels can find a reason for anything.
Knowledge check
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