Pivot Points
Pivot points are calculated support and resistance levels based on the previous period's high, low, and close. They include a central pivot and multiple support (S1, S2, S3) and resistance (R1, R2, R3) levels.
Understanding the Concept
Pivot points are popular among day traders because everyone's watching the same levels. They're self-fulfilling—price often reacts at pivots because traders expect it to. The central pivot (PP) acts as the day's bias. Above PP = bullish, below = bearish. S1 and R1 are the first targets. S2/R2 come into play during trending days. Floor traders have used pivots for decades before screens existed. They work on any timeframe: daily pivots for intraday trading, weekly pivots for swing trading, monthly pivots for position trading.
Real-World Example
Today's daily pivot for Bitcoin is $42,000. Price opens at $42,300, confirming bullish bias. R1 is $43,200—that's your first target. If rejected, S1 at $41,100 is where you'd look for support.
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