This guide explains how standard and Fibonacci pivot points are calculated, a worked example on Nifty, how traders use the levels, and their limits.
Standard pivot points
Using the previous day's high (H), low (L) and close (C):
- Pivot (P) = (H + L + C) ÷ 3
- R1 = 2 × P − L
- S1 = 2 × P − H
- R2 = P + (H − L)
- S2 = P − (H − L)
- R3 = H + 2 × (P − L)
- S3 = L − 2 × (H − P)
R levels are resistance above the pivot; S levels are support below it.
Fibonacci pivot points
Fibonacci pivots use the same pivot but place the other levels at Fibonacci ratios of the previous day's range:
- R1 = P + 0.382 × (H − L)
- R2 = P + 0.618 × (H − L)
- R3 = P + 1.000 × (H − L)
- S1 = P − 0.382 × (H − L)
- S2 = P − 0.618 × (H − L)
- S3 = P − 1.000 × (H − L)
A worked example on Nifty
Suppose yesterday Nifty had a high of 25,180, a low of 24,920 and a close of 25,060. The range is 260 points.
| Level | Standard | Fibonacci |
|---|---|---|
| R3 | 25,446.67 | 25,313.33 |
| R2 | 25,313.33 | 25,214.01 |
| R1 | 25,186.67 | 25,152.65 |
| Pivot | 25,053.33 | 25,053.33 |
| S1 | 24,926.67 | 24,954.01 |
| S2 | 24,793.33 | 24,892.65 |
| S3 | 24,666.67 | 24,793.33 |
The pivot is (25,180 + 24,920 + 25,060) ÷ 3 = 25,053.33. Fibonacci levels sit closer to the pivot because they use fractions of the range.
How traders use pivot points
Bias
If the market opens and holds above the pivot, many traders lean bullish for the day; below it, bearish.
Targets and stops
A trader buying near the pivot may target R1, with a stop below S1. A trader selling at R1 may target the pivot.
Bounces and breaks
At each level, the price either reacts or breaks through. Traders combine pivots with price action, such as a candle closing back above S1 after testing it, before acting. See the support and resistance strategy.
Weekly and monthly pivots
The same formulas with the previous week's or month's high, low and close give longer-term levels, used by swing traders.
Pivot points and CPR
The central pivot range (CPR) adds two levels around the pivot, based on the midpoint of the high and low. Its width is used to judge whether a day is likely to trend or stay in a range. See the CPR calculator.
Using pivots in automated rules
Pivots are calculated before the session opens, which makes them easy to use in rules:
- Buy only above the pivot; sell only below it.
- Enter on a bounce from S1 with a stop below S2.
- Exit long positions at R1 or R2.
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Limits of pivot points
- They are not predictions. Prices often pass through pivot levels without reacting.
- They ignore today's news. A large gap can make yesterday's levels irrelevant.
- Different data, different levels. Using futures instead of the index, or a different close, gives different values. Be consistent.
- Many levels, many chances. With seven levels a day, the price will always be near one of them. Judge pivots by tested results, not by how often the price touches a level.
Frequently asked questions
How do I calculate pivot points?
The pivot is the average of the previous day's high, low and close. Support and resistance levels are calculated from the pivot and the previous day's range.
Which is better: standard or Fibonacci pivots?
Neither is better for every market. Standard pivots spread levels wider; Fibonacci pivots sit closer to the pivot. Test both on your instrument.
Do pivot points work for Nifty?
They are widely used on Nifty and Bank Nifty, which gives them some influence. They work best combined with price action and risk controls.
Should I use the index or futures to calculate pivots?
Either, as long as you are consistent and trade the same instrument you calculate from.
Sources
- Murphy, J. J. (1999). Technical Analysis of the Financial Markets. New York Institute of Finance