Classical Pivot Points (Pivot Points)
Developed by Floor traders at US commodity exchanges, early 20th century
Quick Answer
Pivot Points are horizontal support and resistance levels calculated from the prior session's high, low, and close. They were originally used by floor traders at the Chicago futures exchanges decades before electronic trading, because they provided objective reference levels that any trader could compute in seconds and use throughout the day.
What is the Classical Pivot Points?
Pivot Points are horizontal support and resistance levels calculated from the prior session's high, low, and close. They were originally used by floor traders at the Chicago futures exchanges decades before electronic trading, because they provided objective reference levels that any trader could compute in seconds and use throughout the day. Classical pivot points generate seven levels: the central pivot (PP), three resistance levels (R1, R2, R3), and three support levels (S1, S2, S3). Because these levels are calculated the same way by every trader and every algorithm, they tend to produce genuine price reactions — particularly in instruments with broad participation such as major forex pairs, index futures, and large-cap equities. Modern variations include Woodie, Camarilla, and Fibonacci pivot points, each with slightly different formulas but the same core concept.
How It Works
The central pivot (PP) is the average of the prior period's high, low, and close. Resistance levels are calculated as projections above the pivot, and support levels as projections below. For intraday forex traders, daily pivots calculated from the previous UTC day's range are the standard. When price opens above the pivot, the session is considered bullish and S1/S2 become dynamic support. When it opens below the pivot, the session is bearish and R1/R2 become dynamic resistance. Reversals frequently occur at R1/S1 on average sessions and at R2/S2 during trending sessions. R3/S3 are typically reached only during very large moves and often mark exhaustion points.
Formula
Pivot Point (PP) = (Previous High + Previous Low + Previous Close) / 3
R1 = (2 × PP) - Previous Low
S1 = (2 × PP) - Previous High
R2 = PP + (Previous High - Previous Low)
S2 = PP - (Previous High - Previous Low)
R3 = Previous High + 2 × (PP - Previous Low)
S3 = Previous Low - 2 × (Previous High - PP)How to Read the Pivot Points
- 1Price above PP: bullish session bias
- 2Price below PP: bearish session bias
- 3R1 / S1: first reaction levels in average sessions
- 4R2 / S2: secondary levels reached in trending sessions
- 5R3 / S3: extreme levels, often marking exhaustion
- 6Break of PP during the session: intraday trend change likely
- 7Confluence of pivots with horizontal S/R dramatically strengthens levels
Strengths and Weaknesses
Strengths
- +Objective — same levels for everyone
- +Produces genuine reactions on liquid instruments
- +Ideal for intraday day trading
- +Fast to calculate and update
- +Combines well with pure price action
Weaknesses
- −Less effective on illiquid or low-volume pairs
- −Daily pivots become stale during sustained trending sessions
- −Levels can be cluttered with multiple variants on the chart
- −No directional component — must be paired with trend context
- −Unreliable during extreme news-driven volatility
Best Timeframes
Primarily intraday — 15m, 1H, and 4H. Daily pivots are the standard reference but weekly and monthly pivots matter for swing traders.
Best for: Intraday day trading on major forex pairs, index futures, and large-cap equities where broad participation ensures objective reactions at each level.
Example Strategy
Pivot Reversal with Price Action: On major forex pairs during the London session, watch for price to approach R1 or S1. If you get a clean rejection candle (pin bar, engulfing) at the level, enter a countertrend trade with a stop beyond the pivot. Target the central pivot for a 1:1 and the opposite S1/R1 for the runner. The strategy works best on sessions where the daily range is compressed — avoid it during major news events that force price through all nearby pivots.
This example is educational, not financial advice. Always backtest any strategy and manage risk with appropriate position sizing.
Related Indicators
Brokers That Offer the Pivot Points
Any broker with MetaTrader 4, MetaTrader 5, or cTrader supports the Pivot Points as a standard indicator. Below are our top EU-regulated picks.
Frequently Asked Questions
What is the Classical Pivot Points (Pivot Points)?
Pivot Points are horizontal support and resistance levels calculated from the prior session's high, low, and close. They were originally used by floor traders at the Chicago futures exchanges decades before electronic trading, because they provided objective reference levels that any trader could compute in seconds and use throughout the day. Classical pivot points generate seven levels: the central pivot (PP), three resistance levels (R1, R2, R3), and three support levels (S1, S2, S3). Because these levels are calculated the same way by every trader and every algorithm, they tend to produce genuine price reactions — particularly in instruments with broad participation such as major forex pairs, index futures, and large-cap equities. Modern variations include Woodie, Camarilla, and Fibonacci pivot points, each with slightly different formulas but the same core concept.
Who developed the Pivot Points?
Pivot Points was developed by Floor traders at US commodity exchanges, early 20th century.
What is the formula for the Pivot Points?
Pivot Point (PP) = (Previous High + Previous Low + Previous Close) / 3 R1 = (2 × PP) - Previous Low S1 = (2 × PP) - Previous High R2 = PP + (Previous High - Previous Low) S2 = PP - (Previous High - Previous Low) R3 = Previous High + 2 × (PP - Previous Low) S3 = Previous Low - 2 × (Previous High - PP)
What timeframes work best with Pivot Points?
Primarily intraday — 15m, 1H, and 4H. Daily pivots are the standard reference but weekly and monthly pivots matter for swing traders.
What is Pivot Points best used for?
Intraday day trading on major forex pairs, index futures, and large-cap equities where broad participation ensures objective reactions at each level.