# Pivot Point Calculator

A pivot point calculator is a tool used in technical analysis to calculate potential support and resistance levels for a financial instrument, such as a currency pair, stock, or commodity, based on its previous day’s high, low, and closing prices. Pivot points are used by traders to identify potential price levels where an asset may experience a change in direction.

Here is the formula for calculating pivot points:

Pivot Point (PP) = (Previous High + Previous Low + Previous Close) / 3

Once the pivot point is calculated, traders can also calculate additional support and resistance levels using the following formulas:

Support 1 (S1) = (2 x PP) – Previous High Support 2 (S2) = PP – (Previous High – Previous Low) Support 3 (S3) = PP – 2 x (Previous High – Previous Low)

Resistance 1 (R1) = (2 x PP) – Previous Low Resistance 2 (R2) = PP + (Previous High – Previous Low) Resistance 3 (R3) = PP + 2 x (Previous High – Previous Low)

These support and resistance levels can help traders identify potential areas where the price may reverse or stall, and can be used as part of a trading strategy. ## How does a pivot point calculator work?

A pivot point calculator uses a specific formula to calculate the pivot point and additional support and resistance levels. The most commonly used calculation method is the Standard Pivot Point formula, which involves taking the average of the previous day’s high, low, and close prices. Based on the pivot point, it then calculates support and resistance levels using predefined mathematical formulas.  ## How can I use a pivot point calculator in trading?

Traders use pivot point calculators to identify potential levels of support and resistance, which can aid in making trading decisions. These levels can be used to determine entry and exit points, set stop-loss and take-profit levels, and assess the overall sentiment of a trading instrument. Pivot points are often combined with other technical indicators and analysis techniques to enhance trading strategies. ### Should a trader use a pivot point calculator?

Pivot points are just one tool among many in technical analysis, and they have their limitations. They are based on historical price data and may not always accurately predict future price movements. It’s important to combine pivot point analysis with other forms of analysis and risk management techniques to make well-informed trading decisions.

If you’re interested in incorporating pivot points into your trading, it may be worth exploring and experimenting with a pivot point calculator to see if it aligns with your trading style and strategy.