What Is Pivot Points?
Pivot points are calculated support and resistance levels derived from the previous period's high, low, and close prices. The central pivot point (PP) is the average of these three values. Additional support (S1, S2, S3) and resistance (R1, R2, R3) levels are calculated above and below the pivot using standardized formulas.
How Pivot Points Works
Daily pivot points reset each day based on the prior day's candle, providing fresh levels for intraday trading. Weekly and monthly pivots are also popular for swing traders. The central pivot determines the bias: if price opens above the pivot, the session has a bullish bias; below it, bearish. R1 and S1 are the first targets; R2/S2 and R3/S3 represent extended moves.
Why It Matters for Traders
Pivot points are widely used by institutional and algorithmic traders, which makes them self-fulfilling — enough participants watch these levels to create reactions. In crypto, pivot points are particularly useful for intraday trading because they provide objective, calculated levels that remove subjectivity from support/resistance identification.
