Calculating Daily Pivot Points and Support and Resistance Levels

Summary

This short note gives the classical daily pivot-point calculation using the previous session's high, low, and close. It derives a central pivot as the average of those three values, then calculates four resistance levels above it and four support levels below it using multiples of the previous session's trading range. These levels can serve as reference prices in strategies that test reactions around support and resistance.

The post supplies formulas but does not define entry, exit, stop, or position-sizing rules, and it reports no backtest evidence. It explicitly warns that its Monday calculation incorrectly uses Sunday data and says that this issue needs correction. As a result, anyone implementing the levels should verify which session's prices are used, especially around weekends, and test any resulting trading rules independently.

Key ideas

• The daily pivot is calculated from the prior session's high, low, and close.
• Four resistance and four support levels are derived from the pivot and the prior session's range.
• The levels provide price references but do not constitute a complete trading strategy.
• The author identifies an incorrect Sunday-based calculation for Mondays.
• The note offers no performance evidence or risk-management rules.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.