Pivot Points Explained: Classic & Fibonacci Levels

Pivot Points turn yesterday's price action into today's map. From the previous session's high, low, and close, they project a central pivot (PP) plus resistance (R1, R2) and support (S1, S2) levels — the same levels floor traders have watched for decades.

How Pivot Points Work

The classic formula anchors on the previous day (or week, or month):

• PP = (High + Low + Close) / 3 — the session's equilibrium.
• R1, R2 — projected resistance above.
• S1, S2 — projected support below.

The Fibonacci mode places R and S levels at 38.2% and 61.8% of the previous range instead — popular in forex.

Because every trader computes the same levels from the same data, pivots are partly self-fulfilling: enough orders cluster there to make price react.

How to Trade Them

1. Pivot bounce. In a range, buy at S1 with a stop below S2, targeting PP — and mirror for shorts at R1.

2. Pivot breakout. A strong open above PP that then breaks R1 often continues to R2, especially with momentum confirmation.

3. Bias filter. Above PP = long bias, below PP = short bias. A dead-simple regime rule that keeps trend trades honest.

Building It in Setup.Cash

Add Pivot Points in the strategy builder, pick classic or fibonacci mode, and anchor to the previous day, week, or month. Then write conditions against the PP, R1, R2, S1, S2 series — for example "price crosses above R1 AND RSI above 50."

Tuning

• Prev day: intraday trading — the standard.
• Prev week / month: swing trading; fewer but stronger levels.
• Combine timeframes: a daily S1 sitting on a weekly PP is a higher-confluence level.

Related Reading

Pivots are projected levels; Support/Resistance Zones finds observed levels from actual swings. Strong systems often require both to agree. As always, backtest before trading live.