Using previous days high (H), low (L), and close (C): Pivot Point = (H+L+C)/3 R1 = 2P - L S1 = 2P - H R2 = (P - S1) + R1 S2 = P - (R1 - S1)
Variation 1: PP = (H + L + C)/3 R1 = (PP*2) - L S1 = (PP*2) â H R2 = PP + (H - L) S2 = PP - (H - L) Variation 2 (same as Bob's): PP = (H + L + C)/3 R1 = (PP*2) - L S1 = (PP*2) â H R2 = (PP -S1) + R1 S2 = PP - (R1 - S1) Variation 3 (courtesy of El Cazador): PP = [H + L + C]/3 R1 = PP + [(H - L)/2] S1 = PP - [(H - L)/2] Here is yet another variation that is said to help with overnight gaps by weighting the Pivot Point with the current open. PP = (H+L+C+Todayâs Open)/4 I have no experience with this, but a trader that I know seems to prefer it to the traditional formula. I donât use pivots point to trade, hence I have know idea as to the value of these examples.
tymjr I'm just not sure which one is used more widely Variation 1 or Variation 2 In today's SP emini trading S1 was 1056 and you can see from today's chart that it was a major support level.
I have most often heard Variation 1 quoted. Below is a link to an explanation of how to trade using pivot points. http://customtradingsolutions.com/pivotpoints/files/Pivot Points User Manual.pdf
Thanks tymjr, That's an excellent booklet. I think that emini trading due to high efficiency should be kept as simple as possible.