Definition
Pivot Points
Pivot points are calculated support and resistance levels derived from the previous session's high, low, and close.
The central pivot is the average of the prior day's high, low, and close, with support levels (S1, S2, S3) below and resistance levels (R1, R2, R3) above. They give intraday traders pre-defined levels where price may react before the market opens.
Indian intraday and F&O traders on Nifty, Bank Nifty, and stocks use pivot points to plan entries, targets, and stops around these levels, and the Central Pivot Range (CPR) variant is especially popular for judging whether the day will trend or stay range-bound. Like VWAP, pivots act as self-fulfilling reference points many traders watch.
Related terms
- Fibonacci RetracementFibonacci retracement marks potential support and resistance levels at key ratios of a prior price move.
- BreakoutA breakout is when price moves decisively beyond a defined support, resistance, or pattern boundary, often starting a new move.
- VWAPVWAP (Volume Weighted Average Price) is the average price of a stock over a period, weighted by the volume traded at each price.
- Support and ResistanceSupport is a price level where buying tends to halt a fall; resistance is a level where selling tends to cap a rise.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.