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Pivot point based trading explained with strategies on those levels

What is pivot point ? A pivot point (or fulcrum) is a point around which future price movement is expected to range

Concepts of Pivot point Based on previous days high, low and closed, pivot point, three resistance R1, R2, R3 and three support S1, S2, S3 are calculated. It is believed that stock price will range around pivot point most of the time. When stock price reaches first resistance it has a tendency to react to pivot point and in the same way when it moves towards first support it has tendency to react to pivot point. The more movement away pivot point like R3/S3 the more tendency to retrace.

Origin of Pivot Point in stock trading Use of pivot point is noticed from trader trading in trading zone of the market using pens and papers. These traders used to use these support and resistance to trade in stocks. Even when sophisticated tools have come these points have not lost its significance.
In fact they are used along with tools like candlestick, RSI etc.

Tips on trading with pivot point

Other useful information's helpful while learning Pivot Points
If price is influenced by external news then pivot point looses its significance.

Pivot point are not dynamic like moving average. Their value stay same throughout the day.

In absence of external factors, pivot point is considered as ideal balance between bulls and bears force.

Pivot point can be calculated for week, month etc.
Formula for Pivot Point Calculation
Pivot point (P) = (H + L + C) / 3
Resistance1 (R1) = (P x 2) - L
Support1 (S1) = (P x 2) - H
Where H - Highest Price of Previous Day, L - Lowest Price of Previous Day, C - Closing Price of Previous Day

Resistance Level 2 (R2) = (Pivot Point - Support Level 1) + Resistance Level 1
Support Level 2 (S2)= Pivot Point - (Resistance Level 1 - Support Level 1)
Resistance Level 3 (R3)= (Pivot Point - Support Level 2) + Resistance Level 2
Support Level 3 (S3)= Pivot Point - (Resistance Level 2 - Support Level 2)

Pivot Point and TopStockResearch

Pivot Point in TopStockResearch is shown with three support (S1, S2, S3) and three resistance(R1, R2, R3) respectively for each stock.

Related Technical Stock Screener

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Total Comments 11

User Comments
Posted by Sivaprakash
Posted on: 11-Jun-2017
Very good technical interpretation I ever read on this topics. Congratulations.

Posted by pnm
Posted on: 04-Apr-2016
thanking you for technical information and good information

Posted by Admin
Posted on: 07-Nov-2014
Hi Kailash, Thx for evincing. It has been rectified now.
 Thanks
Site Admin

Posted by kailash
Posted on: 06-Nov-2014
nicely explained in simple minimum words.STOPLOSS LINE NEEDS CORRECTION.
KC CHAWLA---9466302010M

Posted by ravikumar
Posted on: 22-Sep-2014
how to Calculate Pivot Point sir plz help me which formula is currect.

Posted by Guest
Posted on: 20-Sep-2014
If open price is 0.07% below the pivot point and the price of the stock reached between R2 and R3 is this a role reversal

Posted by raj8500
Posted on: 11-Aug-2014
what is range and how to find
 Rajesh Mehta

Posted by Guest
Posted on: 11-Jan-2014
How to calculate resistence R2/Support s2

Posted by Trendy
Posted on: 22-Nov-2013
Resistance Level 2 = (Pivot Point - Support Level 1) + Resistance Level 1
Support Level 2 = Pivot Point - (Resistance Level 1 - Support Level 1)
Resistance Level 3 = (Pivot Point - Support Level 2) + Resistance Level 2
Support Level 3 = Pivot Point - (Resistance Level 2 - Support Level 2)
 Trendy

Posted by Guest
Posted on: 22-Nov-2013
How to calculate the R2,R3 and S2,S3

Posted by Guest
Posted on: 08-Oct-2013
what will be banknifty october 31 trend


(All analysis is based on End of Trade day's Value. Expected time of update is between 5 to 5.30 PM exchange time Zone)

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