The most commonly accepted formula is the standard pivot point calculation, based on high, low and close prices of the chosen period. Fibonacci pivot formula
is also quite popular, along with Camarilla and Woodie’s. Trading strategies are usually based on higher timeframes levels ofsupport and resistance, using the daily, weekly and monthly pivots as a reference, but the formula can be applied to any other time range, or even to a specific market trading session.
Standard Pivot Point Formula
The pivot is determined by adding the High, Low and Close prices of the range and dividing the result by 3. Resistance and Support Levels are then projected as follows:
First level of resistance is obtained through multiplying the pivot price by 2, and then substracting the Low of the trading range.
Second level is the result of substracting the Low from the
High and then adding it to the pivot price.
Third level substracts the Low from the Pivot, multiplies
the result by 2 and then adds it to the High.
We get the first level of support by multiplying the Pivot by 2 and substracting the value of the High.
For second level, we will again substract the Low from the
high, this time substracting the result from the Pivot price.Third level
of support is the projection obtained by getting
twice the value of High minus Pivot, and substracting it from the Low.
R3 = H + 2( Pivot – L)
R2 = Pivot + ( H - L )
R1 = (2 x Pivot ) - L
Pivot = (H + L + C ) / 3
S1 = (2 x Pivot ) - H
S2 = Pivot - ( H - L )
S3 = L – 2 (H - Pivot )