What it is
Floor traders in futures pits used pivot points to set the day's levels before the open, because the numbers came from yesterday's prices and everyone could work them out the same way. Many traders still watch them, which is part of why price often reacts there.
There are several formulas. Classic (also called floor) pivots are the most common. Fibonacci pivots space the levels by 38.2%, 61.8% and 100% of yesterday's range. Camarilla levels sit close to yesterday's close and suit intraday reversals and breakouts. Woodie pivots give more weight to the close, and DeMark pivots change depending on whether yesterday closed up or down.
How it is calculated
Using the previous period's high (H), low (L) and close (C). Classic: P = (H + L + C) / 3; R1 = 2P minus L; S1 = 2P minus H; R2 = P + (H minus L); S2 = P minus (H minus L); R3 = H + 2 x (P minus L); S3 = L minus 2 x (H minus P). Fibonacci: same P; R1, R2, R3 = P + 0.382, 0.618 and 1.000 x (H minus L), S levels the same below. Camarilla: R3 = C + (H minus L) x 1.1 / 4; R4 = C + (H minus L) x 1.1 / 2; S3 and S4 the same below C. Woodie: P = (H + L + 2C) / 4, then R1 = 2P minus L and S1 = 2P minus H. DeMark: X = 2H + L + C if the period closed below its open, H + 2L + C if above, H + L + 2C if level; P = X / 4, R1 = X / 2 minus L, S1 = X / 2 minus H.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| formula | classic | classic, fibonacci, camarilla, woodie, demark | Which pivot formula draws the levels. |
| worked out over | day | hour, session, day, week, month | Which previous period the levels come from. Daily suits intraday trading; weekly and monthly give bigger swing levels. |
| levels each side | 2 | 1 to 5 | How many support and resistance levels are drawn either side of the pivot (classic, Fibonacci and Woodie). |
| camarilla levels | 3 and 4 | 3 and 4; 3, 4 and 5; 1 to 4; 1 to 5 | Which Camarilla levels are shown when the Camarilla formula is chosen. |
How to read it
How to trade it
- 1
On a 5 or 15 minute gold chart, note whether price is above or below the daily pivot after the London open.
- 2
Bounce trade: when price falls to S1 in a day that opened above the pivot, wait for a candle that closes back above S1 (a rejection). Enter on that close.
- 3
Stop a few points beyond the level and the rejection wick, often 4 to 8 points on gold at 15 minutes.
- 4
Target the pivot first, then R1 if the move continues.
- 5
Breakout trade on US30: a close above R1 with momentum, retested and held, targets R2 with a stop back below R1.
For a bounce, a candle closing clearly through the level (beyond S1 for a long) cancels the trade. For a breakout, a close back on the original side of the level ends it.
On WickSpeak, pivot points write a plain-English reading on the live candle: which level price is near, how many points away it is, how to trade it and what would prove it wrong. Standard, Fibonacci, Woodie and Camarilla pivots are also part of WickSpeak's key levels, each shown with its distance in points. Daily pivots use the previous trading day, which rolls over at 5pm New York time, the usual forex and CFD convention.
Best markets and timeframes
Daily pivots suit intraday trading of gold, US30, NAS100 and the major forex pairs on 1 to 15 minute charts. Weekly and monthly pivots suit swing trades on 1 hour to daily charts.
Common mistakes
- Treating every pivot level as a reversal point. On trend days price runs through several.
- Mixing formulas and then trading whichever level price happened to touch.
- Using daily pivots on a 4 hour or daily chart, where they change too often to mean much.
Works well with
Questions traders ask
How do you calculate pivot points?
The classic pivot is yesterday's high plus low plus close, divided by 3. R1 is twice the pivot minus yesterday's low and S1 is twice the pivot minus yesterday's high. R2 and S2 add and subtract yesterday's range from the pivot.
Which pivot points are best for day trading?
Classic pivots are the most widely watched. Camarilla levels sit closer to price and suit intraday reversal and breakout plans. Choose one formula and stick to it so your levels stay consistent.
Do pivot points work on gold?
Many gold traders watch daily pivots, especially around the London and New York opens. Use them as areas, not exact prices, and wait for a candle to close as confirmation before acting.
What is the difference between Camarilla and classic pivots?
Camarilla levels are built around yesterday's close using a fraction of the range, so they sit tighter. Classic pivots are built around the average of high, low and close and spread further apart.