Lesson 5 of 8 · 8 min
Pivot points
How classic floor pivots are calculated from yesterday's high, low and close, how to use them as reference levels, and why the day cut-off changes them.
By the end you'll be able to
- Calculate the classic pivot point, R1, S1, R2 and S2 from yesterday's high, low and close
- Use pivots as reference levels alongside your own support and resistance
- Explain why pivots depend on your platform's day cut-off, and what they cannot tell you
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At the start of each trading day, a pivot indicator draws five fresh horizontal lines on your chart. They all come from one sum on yesterday’s prices.
Five levels from one day
Illustrative EUR/USD candles for one day with classic pivots from the previous day.
Pivot points come from floor traders, who needed a few reference prices for the day that they could work out by hand. The classic formulas use yesterday’s high (H), low (L) and close (C):
- P = (H + L + C) ÷ 3
- R1 = 2 × P − L and S1 = 2 × P − H
- R2 = P + (H − L) and S2 = P − (H − L)
P sits near the middle of yesterday’s trading. R1 and S1 are the first levels above and below; R2 and S2 are a full day’s range away from P. Weekly and monthly pivots use the previous week’s or month’s candle the same way. Other formulas exist (Fibonacci, Camarilla, Woodie); this lesson uses the classic one.
Why they can matter, and why the day cut-off matters
Pivots are arithmetic. They know nothing about where orders actually sit. They can still matter a little because many platforms draw the same lines, so many traders watch the same prices.
That only holds if everyone uses the same daily candle. Spot forex has no official close. Many platforms end the day at 17:00 New York time, but a broker whose server runs on a different clock builds different daily candles, and gets different pivots. Check which daily candle your platform uses before you compare levels with anyone else.
What pivots cannot do
Pivots cannot tell you what kind of day it will be. On a quiet range day, price often swings between S1 and R1 around P. On a trend day or around a big release, such as US jobs data at 13:30 UK time, it can run through R1 and R2 without pausing. The lines look identical on both days.
Treat them as a map of nearby reference prices. A trade still needs your own reason, a stop loss beyond the level and a size that keeps the loss to your plan.
Try it
GBP/USD yesterday: high 1.2750, low 1.2680, close 1.2730. Work out R1, then tap the chart where it would be drawn.
Tap on the chart where you would draw the level.
Illustrative GBP/USD H1 candles for one day.
Work it out on paper first, then tap. After the reveal, see how price reaches the R1 area, stalls and drifts back towards P at 1.2720. Another day, with news, the same line could have given way.
Quick check
Quick check
Question 1 of 4
Yesterday's high 1.0950, low 1.0890, close 1.0920. What is P?
Question 2 of 4
With P = 1.0920 and yesterday's low 1.0890, what is R1?
Question 3 of 4
Your pivots differ from a friend's on the same pair. What is the most likely reason?
Question 4 of 4
Price hits R1 an hour before a major US data release. What does the pivot tell you about what happens next?
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