“A pivot point is a technical analysis indicator used to determine the overall trend of the market over different time frames. The pivot point is simply the average of the high, low and closing prices from the previous trading day. When prices are trading above the pivot point it indicates ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment” 

Pivot points are used strategically to catch support and resistance points, thus, helping in identifying areas where reversal of price movement is possible. Support and resistance points attract the maximum amount of buying and selling.

As the name suggests, the support is something that prevents the price from falling further. The support level is a price point on the chart where traders expects maximum demand (in terms of buying). While resistance level is a price point that prevents price from rising further and hence acts as a maximum selling point.

Pivot table consists of :

1. Pivot point - P
2. Support - S1, S2, S3
3. Resistance - R1, R2, R3

• If the stock opens above P and crosses R1, then one can buy with the target set as R2.
• If the stock opens below P and crosses S1, then one can short with the target set as S2.
• The key thing to remember though is that these are purely intraday levels and change every day when there are new closing prices for the day.

Time Frames in Pivot Points

1. Intra-day Pivot Points - Plotted on 1 min, 3 min, 5 min, 10 min & 15 min chart using previous day’s High (H), Low (L) and Close (C)
2. Weekly Pivot Points - Plotted on 30 min & 1 hour chart based on previous week’s H, L and C
3. Monthly Pivot Points - Plotted on 4 hour & Daily chart based on previous month’s H, L and C

How traders use Pivot Points?

To Conclude

1. Overall trend determination
   Like we mentioned before, a downward movement will indicate bearish and upward movement is sign for bullish.

2. Deciding Entry & Exit
   Traders decide based on the pivot point, when and where to enter or exit the market. For instance, if you see that the price is breaking at resistance level (R1) then I will put a limit order to buy 500 shares. If the same trend applies to support level (S1) then I will set a stop-loss.