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Comparing The Different Types of Pivot Points PDF

Pivot points are used to locate potential support and resistance areas in forex markets. There are five main types of pivot points: standard, Woodie's, Camarilla, Fibonacci, and Demark. Standard pivot points use a simple calculation of high, low, and close prices. Woodie's and Camarilla pivot points assign more weight to the closing price. Camarilla also includes more resistance and support levels. Fibonacci pivot points incorporate Fibonacci ratios. Demark pivot points have conditional calculations based on the relationship of open and close prices. Traders use different pivot point types together with other indicators to identify high probability trade setups.

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Jagmohan Chandra Pathak
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463 views

Comparing The Different Types of Pivot Points PDF

Pivot points are used to locate potential support and resistance areas in forex markets. There are five main types of pivot points: standard, Woodie's, Camarilla, Fibonacci, and Demark. Standard pivot points use a simple calculation of high, low, and close prices. Woodie's and Camarilla pivot points assign more weight to the closing price. Camarilla also includes more resistance and support levels. Fibonacci pivot points incorporate Fibonacci ratios. Demark pivot points have conditional calculations based on the relationship of open and close prices. Traders use different pivot point types together with other indicators to identify high probability trade setups.

Uploaded by

Jagmohan Chandra Pathak
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Summary Cheat Sheet: Comparing the Different Types of Pivot Points

• Pivot points are used by forex traders to locate potential support and resistance areas. They are levels
where price interaction may cause a reaction. In addition, Pivot points help traders gauge the bias and
sentiment in the market over a given time interval.

• There are five major types of Pivot Points - Standard Pivot Points, Woodie’s Pivot Points, Camarilla Pivot
Points, Fibonacci Pivot Points, and Demark Pivot Points.

• Standard Pivot Points

Standard Pivot Points are also commonly referred to as Floor Pivots or Classical Pivot Points. These terms are
often used interchangeably, but the important point to remember is that they are the most common type of
pivots that traders use.

Pivot Point (P) = (High + Low + Close)/3

Support 1 (S1) = (P x 2) - High

Support 2 (S2) = P - (High - Low)

Resistance 1 (R1) = (P x 2) - Low

Resistance 2 (R2) = P + (High - Low)

• Woodie’s Pivot Points

Woodie’s Pivot Points are calculated as per below:

R2 = PP + (High – Low)

R1 = (2 X PP) – Low

PP = (High + Low) + (2 x Closing Price) / 4

S1 = (2 X PP) – High

S2 = PP – (High + Low)

As you may have noticed the Woodies Pivot calculation is quite different than the standard pivot points
formula. One of the primary differences is that the Woodie’s formula puts more weight on the closing price.
Notice that the Pivot Point (PP) calculation involves multiplying the closing price by 2, and then adding the
High and Low. From this you would divide by 4 to get the PP level.
• Camarilla Pivot Points

Camarilla Pivot Points were invented by Nick Scott in the late 1980’s. They are similar in concept to Woodie’s
in that they use the prior day’s closing price and range to compute the levels.

But instead of 2 Resistance levels, and 2 Support levels, the Camarilla equation calls for 4 resistance levels
and 4 support levels. Add to that the Pivot Point level, and there are a total of 9 levels plotted for Camarilla.
Also, an interesting part of the Camarilla equation is that a special multiplier is included in the formula.

Let’s take a look at the Camarilla Pivot point formula:

R4 = Closing + ((High -Low) x 1.5000)

R3 = Closing + ((High -Low) x 1.2500)

R2 = Closing + ((High -Low) x 1.1666)

R1 = Closing + ((High -Low x 1.0833)

PP = (High + Low + Closing) / 3

S1 = Closing – ((High -Low) x 1.0833)

S2 = Closing – ((High -Low) x 1.1666)

S3 = Closing – ((High -Low) x 1.2500)

S4 = Closing – ((High-Low) x 1.5000)

Many intraday traders utilize the Camarilla levels to fade price moves when then reach the R3 or S3 level.
The idea is that the markets are cyclical in nature, and that a strong price move from the prior session,
should tend to revert back within its value range the following day. Stops could be placed at the R4 or S4
levels. If, however, price action continues beyond the R4 or S4 level, then a stop and reverse can be initiated
in anticipation for a strong trend day and continued price move beyond the R4 or S4 level.

• Fibonacci Pivot Points

Here is the formula for calculating Fibonacci Pivot Points:

Resistance 1 = Pivot + (.382 * (High - Low))

Resistance 2 = Pivot + (.618 * (High - Low))

Resistance 3 = Pivot + (1 * (High - Low))

Pivot Point = (High + Low + Close) / 3

Support 3 = Pivot - (1 * (High - Low))

Support 2 = Pivot - (.618 * (High - Low))

Support 1 = Pivot - (.382 * (High - Low))


• Demark Pivot Points

Demark Pivot points were introduced by Tom Demark, a famous technical analyst and trader. Demark Pivots
are very different from other types of Pivot Points that we have discussed thus far.

These pivot points have a conditional nature based on the relationship between the opening price and the
closing price. Demark uses the number X to compute the upper resistance level and the lower support line.

Here is how you calculate Demark Pivot Points:

If Close > Open, then X = (2 x High) + Low + Close

If Close < Open, then X = High + (2 x Low) + Close

If Close = Open, then X = High + Low + (2 x Close)

Pivot Point = X/4

Resistance 1 = X/2 - Low

Support 1 = X/2 - High

Demark Pivot Points place more emphasis on the recent price action. Many Demark traders use Demark
Pivot Points in conjunction with TD lines to find intraday support and resistance levels in the market. TD lines
are much more objective than traditional trend lines. They are drawn from left to right based on the demand
points in an uptrend and supply points in a downtrend. The objective is to find points along the TD line that
are most likely prone to a breakout move.

• It is important to combine Pivot Points with other technical studies in order to create a high confidence trade
setup.

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