Welcome back to our series on pivot points, an objective a simple tool used by many day traders. In Part 1, we explored the central pivot point, its calculation, and its role as a key reference for market sentiment. In Part 2, we’ll expand on this foundation by diving into the support and resistance levels derived from the pivot point formula. These levels are designed to add depth to your day trading analysis, offering a more comprehensive view of intraday price action. The Mechanics: Support and Resistance Levels In addition to the central pivot point (PP), pivot analysis includes three levels of support (S1, S2, S3) and three levels of resistance (R1, R2, R3). These levels are calculated using the previous session’s high, low, and close. The formulas for the primary levels are as follows: PP = (previous high + previous low + previous close) / 3 S1 = (pivot point x 2) - previous high S2 = pivot point - (previous high — previous low) R1 = (pivot point x 2) — previous low R2 = pivot point + (previous high — previous low) The third levels (R3 and S3) extend even further but are less frequently reached in typical intraday trading. These levels create a structured framework for identifying potential reversal points, breakout zones, and profit targets. S&P 500 5min Candle Chart https://www.tradingview.com/x/jzxfl6GW/ Past performance is not a reliable indicator of future results Using Pivot Levels in Your Trading 1. Trading the Reversal: Support and Resistance in Action One of the most common ways to use pivot levels is to identify potential reversal points. For example, if the price reaches S1 or R1 and shows signs of hesitation, it may indicate a reversal is likely. This is particularly true when combined with candlestick patterns, momentum indicators, or divergence on oscillators like RSI. Example: In this EUR/USD 5-minute chart, we see a textbook reversal at R1. The market initially uses the pivot point (PP) as support and then forms a double top reversal pattern when retesting R1 resistance, signalling a potential upward move. This setup allows traders to enter with a clear stop above R1 and a target near the pivot point or dynamic moving average. EUR/USD 5min Candle Chart https://www.tradingview.com/x/Evxc8y5G/ Past performance is not a reliable indicator of future results 2. Riding the Breakout When momentum is strong, the market can break through pivot levels, turning resistance into support (or vice versa). Watching for breakouts at R1 or S1 can provide excellent entry points for trend-following strategies. Example: In this example, the FTSE 100 having earlier reversed at R1 and broken through PP, briefly consolidates near S1. This is followed by a break lower – triggering a swift move down to S2. FTSE 100 5min Candle Chart https://www.tradingview.com/x/L1ZGkcDe/ Past performance is not a reliable indicator of future results 3. Target Setting and Risk Management Pivot levels are also useful for setting realistic profit targets and stop losses. For example, a trader entering a long position near S1 might use the pivot point as an initial target, depending on the strength of the move. Similarly, a short position initiated near R1 could aim for the pivot point as an initial target and S1 as a secondary target, with stops placed just above the breakout level to manage risk. Combining Pivot Levels with Other Tools While pivot levels are powerful on their own, combining them with other tools can significantly enhance their effectiveness: VWAP: If a pivot level aligns with VWAP, it reinforces the level’s importance as a potential support or resistance zone. Prior Days High/Low: Pivot levels that coincide with the previous session’s high or low can serve as stronger reversal or breakout points. RSI: Use RSI to gauge momentum—if price approaches a pivot level while RSI is negative or positive divergence at an overbought or oversold, it can signal a potential reversal. Example: In the below example we see the FTSE hold above VWAP and the pivot level – forming a solid base of support before breaking higher. The market breaks through R1 and the prior days high leading to a charge past R2 to and towards R3. At R3 we see the market start to stall as the RSI shows signs of negative divergence. FTSE 100 5min Candle Chart https://www.tradingview.com/x/PDKeBbdB/ Past performance is not a reliable indicator of future results Summary Pivot points, along with their associated support and resistance levels, offer traders a structured framework for navigating intraday price action. By understanding how these levels interact with market sentiment and momentum, traders can develop more confident strategies for reversals, breakouts, and risk management. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing
Ethereum i think we face bottom. Soon UP only after such liquidation chances for drop are small
The Dollar Index has approached a key upward trend line. After a sharp decline, the market seems overbought, and the formation of a cup and handle pattern suggests weakening selling pressure. A retracement to 108.80 is expected.
Is XRP still a BUY? ?SeekingPips? says keep it SIMPLE. ✅️If one was accumulating XRP Ripple for the LONG TERM and liked it at $3 why do you not like it NOW?✅️ ℹ️ Like I said before EVERYONE WAITS for the PULLBACK but when it turns up TRADERS/INVESTORS get SCARED to enter at these LOWER PRICES and some EVEN go SHORT and TRADE AGAINST their OWN BIAS. ?It is a strange phenomenon but its VERY TRUE. Do what the 1% do and you will be OK.
there is a very nice reactions on #BTC chart and the VWAP indicator ! the price is exacly reacting to VWAP bonds and made lots of positions for us now the market owns the whole liq for a big rise so its obvious that after a small fall it will rise to the higher targets
HELLO TRADERS Gold continues its strong bullish trend, recording a new high at 2906.980, with price movement showing significant strength within the rising channel. The momentum remains intact, with the next major target set at 2930.000. The recent surge in gold prices, jumping more than 1% on Monday, was fueled by increased safe-haven demand following U.S. President Donald Trump's announcement of a 25% tariff on all steel and aluminum imports. The market reacted strongly to the news, with fears of a global trade war further driving demand for gold. Additionally, Trump signaled upcoming reciprocal tariffs, which could add further uncertainty to global markets, sustaining gold’s bullish pressure. From a technical perspective, gold remains within its rising channel, with the support zone holding firm and previous consolidation phases fueling further upside. However, given the extended bullish move, a correction could occur at any time, either technically or due to unexpected market shifts. Traders are also eyeing U.S. CPI and PPI data later this week, which could impact interest rate expectations and influence gold’s direction. While the dominant trend remains bullish, volatility is expected as the market reacts to both technical and fundamental developments. Dear Traders, if you find this analysis helpful or have your own insights, drop a comment below! I’d love to hear your thoughts.
We can see in gold that we are in a bullish channel situation with a succession of many green candles accompanied by many green volumes. This situation draws our attention to a probability of having a decline. This decline will be confirmed by the strong break of the support line and the vwap indicator by a large red candle and followed by a large red volume.
By analyzing the 3-day EUR/USD chart, we can see that, as expected, the price has resumed its correction and is currently trading around 1.03. I still anticipate further downside movement in this range. The key demand zones are 1.02, 1.005, and 0.99. So, the strategy remains: first, look for SELL opportunities, and then wait for a solid BUY trigger at these levels! ? https://www.tradingview.com/chart/EURUSD/afCf50IT-EUR-USD-More-Fall-Ahead-Let-s-See-READ-THE-CAPTION/ Please support me with your likes and comments to motivate me to share more analysis with you and share your opinion about the possible trend of this chart with me ! Best Regards , Arman Shaban
Hello Traders, there are 2 zones that you can enter market. the first one is between 5980 and 5950. If it coincides with Bollinger lower band, it could go up more sharply. in that case top of red bearish channel could be considered as the 1st tp. The 2nd option available after breaking the top zone, in reverse to 6132 we could enter the market again. Remember that again Bollinger band could help us to confirm the long trade. 6240 could be used as TP, as well as the higher band of Bollinger band is a good place to take profit.
EURUSD is in a descending channel between trend lines. The price is moving from the lower boundary of the channel and dynamic support, which previously acted as a rebound point. The chart is holding above the 62% retracement level. We expect a bounce in the channel. ------------------- Share your opinion in the comments and support the idea with like. Thanks for your support!