It’s a pleasure for me to announce the launch of Pivot Points on our trading platform, Fyers Web. I understand that this has been long overdue due to various factors involved in the execution of this feature. However, I hope you will like it and think it’s worth the wait. Based on the popular feedback of our thousands of users, we have worked alongside TradingView by giving them our inputs to able to deliver the best features to our clients. Some of the pivot point features available are unique in India and exclusively available on Fyers Web trading platform. You can view our video tutorials on this topic on our Youtube channel in both, English & Hindi.
How are pivot points useful?
For those who are not aware, pivot points are used to determine key price levels which can cause a reaction by buyers and sellers during the trading day. Originally, they were created by the floor traders of the exchanges to quickly identify key levels. These price levels act as support and resistance lines and can also indicate levels where short-term reversals can occur and do often occur on a regular basis. Pivot points are commonly used by all types of traders but particularly those who are more interested in day trading & short-duration swing trading. Pivot points can be used in multiple timeframes and there are no fixed standards with regards to its usage as a technical analysis tool. They are most useful when combined with other technical analysis indicators/tools to identify momentum such as chart patterns, stochastics/RSI/MACD etc. Since they are so widely used by day traders around the world, the price levels can have a self-fulfilling prophecy in the short-term.
Interpreting Pivot Points:
They can be useful in identifying the overall market trend and the predictable range. On days when the market volatility is high, the higher support & resistances should be considered as the potential range and on days when the market volatility is low, the lower support and resistance levels should be considered as the potential range during the day. Pivot point levels are also widely used to enter and exit trades. Usually, if the price breaks out of the uppermost resistance or the lowermost support, there might be a further movement in the same direction. However, if the prices are within their normal range, then these levels can indicate reversals.
List of Pivot Points features on Fyers Web:
In total, we have 6 types of Pivot Points on our trading platform which is the highest on any trading platform in India. While most retail traders use standard pivot points, we have several variants for you. These will help you analyze trading opportunities using different levels as reference points. The different types of pivot points are as follows with the appropriate explanation for each of them:
Traditional
These pivot points are calculated using the previous period’s closing prices and it is a simple average of the low, high and close. The support & resistance lines are derived from the pivot points. For instance, in this case:
- Pivot Point (P) = (Low + High + Close) / 3
- Resistance 1 (R1) = (Pivot * 2) - Low
- Support 1 (S1) = (Pivot * 2) - High
- Resistance 2 (R2) = Pivot + (High - Low)
- Support 2 (S2) = Pivot - (High - Low)
- Resistance 3 (R3) = Pivot * 2 + (High - 2 * Low)
- Support 3 (S3) = Pivot * 2 - (2 * High - Low)
- Resistance 4 (R4) = Pivot * 3 + (High - 3 * Low)
- Support 4 (S4) = Pivot * 3 - (3 * High - Low)
- Resistance 5 (R5) = Pivot * 4 + (High - 4 * Low)
- Support 5 (S5) = Pivot * 4 - (4 * High - Low)
Fibonacci
The starting point of Fibonacci pivot points are the same as standard pivot points. However, they use the Fibonacci series numbers in the calculation of support and resistances unlike standard pivot points. It uses the previous day’s range (High - Low) with its corresponding Fibonacci level. Fibonacci series is used in multiple different indicators to project potential price levels using retracements, extensions, Arcs etc. This is yet another variant of the Fibonacci indicators available. The calculations are as follows:
- Pivot Point (P) = (Low + High + Close) / 3
- Resistance 1 (R1) = Pivot + 0.382 (High - Low)
- Support 1 (S1) = Pivot - 0.382 (High - Low)
- Resistance 2 (R2) = Pivot + 0.618 (High - Low)
- Support 2 (S2) = Pivot - 0.618 (High - Low)
- Resistance 3 (R3) = Pivot + (High - Low)
- Support 3 (S3) = Pivot - (High - Low)
Woodie
It gives more weightage to the closing price of the previous period as compared to the standard and Fibonacci pivot points. Hence, the resistance and support levels of the woodie calculations are very different from the rest mentioned above. However, one must take note of the fact that woodie pivot points are not as widely used but it can be useful if you prefer this method of identifying price levels.
- Pivot Point (P) = (Low + High + 2 * Open) / 4
- Resistance 1 (R1) = (Pivot * 2) - Low
- Support 1 (S1) = (Pivot * 2) - High
- Resistance 2 (R2) = Pivot + (High - Low)
- Support 2 (S2) = Pivot - (High - Low)
- Resistance 3 (R3) = High + 2 (Pivot - Low)
- Support 3 (S3) = High - 2 (High - Pivot)
- Resistance 4 (R4) = Pivot R3 + (High - Low)
- Support 4 (S4) = Pivot S3 - (High - Low)
Classic
This method gives equal weight to all the prices of the previous period without a bias. The support and resistance levels are then calculated using the standard reference points of the highs and lows of the previous period. The calculation methodology for classic pivot points are as follows:
- Pivot Point (P) = (Low + High + Close) / 3
- Resistance 1 (R1) = (Pivot * 2) - Low
- Support 1 (S1) = (Pivot * 2) - High
- Resistance 2 (R2) = Pivot + (High - Low)
- Support 2 (S2) = Pivot - (High - Low)
- Resistance 3 (R3) = Pivot + 2 (Pivot - Low)
- Support 3 (S3) = Pivot - 2 (High - Low)
- Resistance 4 (R4) = Pivot + 3 (High - Low)
- Support 4 (S4) = Pivot - 3 (High - Low)
DeMark
This method of calculating pivot points use a different base and a set of formulas to calculate support and resistance levels. Unlike being fixed in other types, the Demark pivot points are conditional based on the open and close of the previous periods. The unique thing about this method is that these pivot points have only 1 resistance and support level unlike other calculation methods.
- If Close < Open, then X = High + (2 * Low) + Close
- If Close > Open, then X = (2 * High) + Low + Close
- If Close = Open, then X = High + Low + (2 * Close)
- Pivot Point (P) = X/4
- Support 1 (S1) = X/2 - High
- Resistance 1 (R1) = X/2 - Low
Camarilla
The calculation methodology of the pivot point is the same as the classic pivot points However, the resistance and support levels are calculated differently.These pivot points are widely used for intraday trading. It relies on the principles of mean reversion and a bit of trend following too. Camarilla pivot points were discovered by a successful fixed income trader named Nick Scott in 1989. The most important levels in this method are the S3, R3, S4 and R4. In this method, S3 and R3 are considered points of reversal and S4 and R4 levels indicate that a mean reversion has failed and a break beyond those levels indicate breakouts. The calculation is as follows:
- Pivot Point (P) = (Low + High + Close) / 3
- Resistance 1 (R1) = Close + (High - Low) * 1.1 / 12
- Support 1 (S1) = Close - (High - Low) * 1.1 / 12
- Resistance 2 (R2) = Close + (High - Low) * 1.1 / 6
- Support 2 (S2) = Close - (High - Low) * 1.1 / 6
- Resistance 3 (R3) = Close + (High - Low) * 1.1 / 4
- Support 3 (S3) = Close - (High - Low) * 1.1 / 4
- Resistance 4 (R4) = Close + (High - Low) * 1.1 / 2
- Support 4 (S4) = Close - (High - Low) * 1.1 / 2
I have given you the formulas just so that you can analyze and decide which ones are the most beneficial for your kind of use. You can change the pivot points display from the settings window. Now that pivot points have been finally implemented, we will be introducing more features in the near future. We look forward to your continued patronage. If you like what we have done so far and want to spread the word about us, you can refer your friend to us here. It’ll go a long way in encouraging us to build a more robust trading platform for all traders in India.