Indicator: What Are Pivot Points? Daily Support & Resistance

Pivot Points are a set of support and resistance levels calculated with a fixed formula from the previous period's high, low, and close — no swing high/low judgment required like Fibonacci Retracement. Because the formula is fixed, every trader looking at the same timeframe sees the exact same levels, which is part of why they're so widely watched, especially by day traders on the daily pivot. The technique predates screens entirely — floor traders computed these levels by hand each morning from yesterday's numbers to know where they'd act during the day.

How the Levels Are Calculated

Using the prior period's High, Low, and Close:

• Pivot Point (PP) = (High + Low + Close) ÷ 3
• R1 = (2 × PP) − Low
• S1 = (2 × PP) − High
• R2 = PP + (High − Low)
• S2 = PP − (High − Low)
• R3 = High + 2 × (PP − Low)
• S3 = Low − 2 × (High − PP)

This gives seven levels: the central Pivot Point, three resistance levels above it (R1, R2, R3), and three support levels below it (S1, S2, S3). Note that the previous day's range (High − Low) drives the spacing — after a volatile day the levels sit wide apart, after a quiet one they cluster tightly, so the map automatically scales to recent volatility, much like ATR does for stops.

A worked example: yesterday EUR/USD ranged from a low of 1.0800 to a high of 1.0900 and closed at 1.0880. Then PP = (1.0900 + 1.0800 + 1.0880) ÷ 3 ≈ 1.0860, R1 = 2 × 1.0860 − 1.0800 = 1.0920, S1 = 2 × 1.0860 − 1.0900 = 1.0820, R2 ≈ 1.0960, S2 ≈ 1.0760. Today's trading now has a pre-computed map before the first candle prints.

On a normal day, price opens somewhere near PP and rotates between the first levels; R1 and S1 see the most action, while R2/S2 mark stretched days and R3/S3 are typically only reached on major news.

Entry Conditions

• BUY — price pulls back into a support level (commonly S1) and shows signs of bouncing, similar logic to trading off support and resistance — a rejection candle at the level, not a blind touch.
• SELL — price rallies into a resistance level (commonly R1) and shows signs of rejecting it.
• The Pivot Point itself acts as a directional bias line: price trading above it for the session is often read as bullish bias, below it as bearish bias.

The levels also structure the whole trade, not just the entry: a bounce at S1 naturally targets PP (or R1 on a strong day), with a stop below S2 — defined Risk:Reward before the trade is placed, as Risk Management Basics requires. Breakout traders use the same map in reverse: a decisive break through R1 targets R2, treating the broken level as new support on any retest.

Why Traders Use the Daily Pivot Specifically

Daily pivots (calculated from the previous full trading day) are the most commonly watched version, especially around the start of a new trading session — see Trading Sessions for when those begin. Because so many market participants plot the exact same daily levels, they can become somewhat self-fulfilling: enough traders placing orders around R1/S1 can itself create the reaction at that price.

One practical wrinkle: "the previous day" depends on which midnight your platform uses. Brokers run on different server times, so two traders' daily pivots can differ slightly because their days rolled over at different hours. It matters little in practice — the levels land close together — but it explains why your levels may not match a friend's exactly. Weekly and monthly pivots follow the same formulas from the prior week's or month's data, and swing traders watch those the way day traders watch the dailies; a daily S1 landing near a weekly PP is classic confluence.

Variants You'll Encounter

The formula above is the Classic (Floor) calculation, but platforms often offer alternates: Woodie (weights the close more heavily), Camarilla (eight tighter levels favored by intraday mean-reversion traders), and Fibonacci pivots (spacing the levels at 38.2%/61.8% of the prior range, marrying this lesson to the Fibonacci one). The differences are modest; what matters is that the Classic daily version is the most widely watched, and the crowd's attention is much of the point.

A Word of Caution

Like any fixed support/resistance level, price can blow through a pivot level completely, especially during high-impact news (check the Economic Calendar before relying on a level holding) — and on strong trend days, price can walk from PP through R1, R2, and R3 without a single meaningful pullback, running over every fade along the way. Pivot levels work best as zones to watch combined with candlestick confirmation or another indicator, not as an automatic entry trigger on touch alone.

Download the Indicator

Unlike most indicators in this series, Pivot Points are normally a manual drawing tool. This custom auto-pivot indicator automatically calculates and draws all seven levels from the previous day's High, Low, and Close, and alerts when price touches R1 or S1. It's available for both MetaTrader 4 and MetaTrader 5 below.

How to Install — MetaTrader 4

1. Download the pivot-points-alert.mq4 file below.
2. Open MetaTrader 4 → click File → Open Data Folder.
3. Place the file in the MQL4/Indicators folder.
4. Restart MetaTrader 4, then drag the indicator from the Navigator window onto the chart.

How to Install — MetaTrader 5

1. Download the pivot-points-alert.mq5 file below.
2. Open MetaTrader 5 → click File → Open Data Folder.
3. Place the file in the MQL5/Indicators folder.
4. Restart MetaTrader 5, then drag the indicator from the Navigator window onto the chart.

Both files are source code — open and review the full code before using it, for your own safety.