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Pivot Point Calculator

The pivot point calculator is used to calculate the pivot point, supports and resistances. The pivot point is a technical analysis indicator used to determine the overall trend of the market over time. Pivot point itself is the average of the high, low and closing prices of the previous trading day. On the following day, trading above the Pivot Point is considered to indicate continued bullish sentiment, while trades below the Pivot Point indicated bearish sentiment.




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Pivot Point Calculator

The basic purpose of the pivot point calculator is used to determine the important levels of support and resistance. It is also used to determine market sentiment: in a trend market, when the market trend, the price will fluctuate from the support level to the resistance level, and when the market has no direction or unequal market, the price usually fluctuates around the two PPs until Suddenly happened. In addition, pivot points are an important technical tool for placing trade orders.

 

pivot point calculator

Calculation

Although there are several ways to calculate the pivot point using a pivot point calculator. The most common is the standard pivot point system. It uses the simple arithmetic mean of the high, low, and closing prices of the previous trading day to determine the pivot point, which is the basis for calculating various support (S) and resistance (R) levels. The daily pivot points are usually calculated based on the closing time in New York.

 

Support and resistance levels

Price support and resistance are key trading tools in any market because markets change their direction from these levels. Therefore their roles are interchangeable, depending on whether the price level is approaching in a trend-up or down-trend market. These price levels may come from many market assumptions and practices. In pivot point analysis, multiple levels are typically identified below and above the pivot point, typically three levels. These are calculated with pivot point calculator based on the price range of the previous trading period.

First Support/Resistance

The first and most important support (S1) and resistance (R1) are obtained by identifying the upper and lower halves of the previous trading interval, which is defined by the trade above the pivot point (H-P), and below it (P-L). The first resistance to market upside is from the lower width of the previous trade increase to the pivot point price, while the first support for the downside is the upper width of the previous trading range below the pivot point.

Resistance One (R1) = P + (P – L) = 2 × P – L.
Support One (S1) = P – (H – P) = 2 × P – H.

Therefore, these levels can be simply calculated with pivot point calculator by subtracting the previous low (L) and high (H) prices from twice the value of the pivot point, respectively.

Second Support/Resistance

The second set of resistance (R2) and support (S2) levels are above and below the first set, respectively. They are only determined based on the entire width of the previous trading range (H – L). Which are added and subtracted from the pivot point:

Resistance Two (R2) = P + (H – L)
Support Two (S2) = P – (H – L)

Third Support/Resistance

The third level is usually also calculated, again indicating another higher resistance level (R3) and a lower support level (S3). Continue the second set of methods by doubling the range of additions and subtracting from the pivot point, calculated by pivot point calculator.

Resistance Three (R3) = H + 2 × (P – L) = R1 + (H – L)
Support (S3) = L – 2 × (H – P) = S1 – (H – L)

This concept is sometimes rare, but extends to the fourth group, where three times the trading range is used for calculations.
Qualitatively, the second and higher support and resistance levels are always symmetrically positioned around the pivot point. Which is not the case for the first level unless the pivot point just splits the previous trading range into two halves.

 

Using the pivot point

The pivot point is the reaction price level. If the underlying securities transaction is above the pivot point, the pivot point is considered a support or support level. The pivot point above the price of the underlying security is considered the price resistance level. When the pivot point is initially tested, the price tends to pause or deflect. This can be explained by broadly following the nature of the fulcrum from retailers and floor traders to professionals and institutions. Combining pivot points with other trend indicators is a common practice for traders. A pivot point that overlaps or converges with a 50 or 200 period of moving average becomes a stronger price support or resistance level.