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Pivot Points

Trading Term

The Pivot Point indicator calculates the numerical average of a stock’s high, low and closing prices, and is used to help identify resistance and support levels. We calculate pivot points using the five-point system, which uses the previous day’s high, low and close to get the pivot point, and then calculates two resistance levels and two support levels, as follows:

R2=P + (H-L) = P + (R1-S1)

R1 = (P x 2) – L

P = (H + L + C) /3

S1 = (P x 2) – H

S2 = P – (H – L) = P – (R1 – S1)

Where “S” is the support levels, “R” is the resistance levels, “P” is the pivot point, H, L, C are high, low and close, respectively.

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