Pivot Points
Support and resistance levels calculated directly from the prior period's high, low, and close — not drawn by eye, computed by formula.
Where the Support & Resistance lesson earlier in this track covers levels identified by eye (price has visibly reacted here before), pivot points are the formula-driven version — a specific calculation using the prior period's high, low, and close produces a central pivot level plus a series of support and resistance levels above and below it. InsiderWolf's chart offers the first resistance and support levels (R1 and S1) as live overlays.
Originally a floor-trading tool (calculated once per day, before electronic markets existed, so floor traders had fixed reference levels for the session), pivot points remain popular specifically because every trader looking at the same prior-period data arrives at the identical levels — a rare case of a technical level with no subjectivity in where it's drawn.
R1 and S1 (the first resistance and support levels) are then derived from the pivot plus the prior period's range — every trader computing from the same prior data lands on the same levels.
- The core appeal is objectivity — unlike eyeballed support/resistance, every trader using the same formula on the same prior-period data gets identical levels.
- Most commonly used on intraday timeframes (recalculated each session), though the same math applies to weekly or monthly pivots for longer-term reference levels.
- Like any support/resistance level, a pivot level is a place to watch for a reaction, not a guarantee that one occurs — treat a level test as a decision point, not a certainty.