Pivot Level in Share Market – Calculate Pivot Points | Best Indicator

Pivot Level in Share Market

Pivot level in the share market is a technical analysis indicator that traders use to identify potential price levels where an asset may experience support or resistance. These levels are calculated based on the previous day’s price action and are used to determine potential turning points in the market.

The Pivot point and Pivot level in the Share Market are popular technical analysis tools used by traders to identify potential levels of support and resistance in the markets.

A pivot point is a level that is calculated based on the previous day’s high, low, and closing prices, and is used as a potential level of support or resistance for the current trading day. Pivot points are commonly used in conjunction with other technical indicators to determine potential entry and exit points for trades.

There are several types of pivot points, including:

1. Standard Pivot Points –
calculated using the previous day’s high, low, and closing prices.
2. Fibonacci Pivot Points –
calculated using Fibonacci retracement levels based on the previous day’s high, low, and closing prices.
3. Camarilla Pivot Points –
calculated using a formula based on the previous day’s high, low, and closing prices, and are used by some traders to identify potential intraday support and resistance levels.

A pivot level is simply a level of support or resistance that is identified using pivot points.
Pivot levels are important because they can help traders identify potential levels where the market may reverse direction, and can be used to set stop-loss orders and profit targets.

Overall, pivot points and pivot levels are popular technical analysis tools that can be used by traders to identify potential support and resistance levels in the markets.
However, as with any technical analysis tool, it’s important to use pivot points and pivot levels in conjunction with other technical indicators.

How to Calculate Pivot Points?

The calculation of pivot points involves a simple mathematical formula, which is based on the high, low, and closing price of the previous day’s trading session. Here are the steps to calculate pivot points:

1. Start by identifying the high, low, and closing price of the previous trading day.
2. Calculate the pivot point by adding the high, low, and closing prices of the previous day, and then dividing the result by 3.
The formula for pivot point calculation is:
Pivot Point = (High + Low + Close) / 3
3. Calculate the support and resistance levels based on the pivot point:
Support 1 (S1) = (2 x Pivot Point) – High of the Previous Day
Support 2 (S2) = Pivot Point – (High – Low) of the Previous Day
Support 3 (S3) = Low of the Previous Day – 2 x (High – Pivot Point)
Resistance 1 (R1) = (2 x Pivot Point) – Low of the Previous Day
Resistance 2 (R2) = Pivot Point + (High – Low) of the Previous Day
Resistance 3 (R3) = High of the Previous Day + 2 x (Pivot Point – Low)
4. Use the calculated pivot point, support, and resistance levels to identify potential trading opportunities.
For example, if the price of a stock is trading near a support level, it may be a good buying opportunity. Conversely, if the price is trading near a resistance level, it may be a good selling opportunity.

It is important to note that pivot points are a popular tool used by traders to identify potential levels of support and resistance, but they should not be used in isolation. Other technical indicators, as well as fundamental analysis, should also be considered when making trading decisions.

Example of Pivot Point

Let's say that the closing prices of a stock for the previous day were as follows:

• High: Rs. 150
• Low: Rs. 120
• Close: Rs. 140

Using these values, we can calculate the pivot level and support and resistance levels as follows:

• Pivot Point = (High + Low + Close) / 3 = (150 + 120 + 140) / 3 = 136.67
• Support 1 (S1) = (2 x Pivot Point) - High of the Previous Day = (2 x 136.67) - 150 = 123.33
• Support 2 (S2) = Pivot Point - (High - Low) of the Previous Day = 136.67 - (150 - 120) = 106.67
• Support 3 (S3) = Low of the Previous Day - 2 x (High - Pivot Point)
= 120 - (2 x (150 - 136.67)) = 93.33
• Resistance 1 (R1) = (2 x Pivot Point) - Low of the Previous Day = (2 x 136.67) - 120 = 153.33
• Resistance 2 (R2) = Pivot Point + (High - Low) of the Previous Day = 136.67 + (150 - 120) = 166.67
• Resistance 3 (R3) = High of the Previous Day + 2 x (Pivot Point - Low)
= 150 + (2 x (136.67 - 120)) = 183.33

Now, we can use these levels to identify potential trading opportunities. For example, if the price of the stock falls towards the S1 level, it may be a good buying opportunity.
Conversely, if the price rises towards the R1 level, it may be a good selling opportunity.
However, it is important to note that pivot points should not be used in isolation and should be
used in conjunction with other technical indicators and fundamental analysis.

Best Pivot Point Indicator in Share Market

There are several pivot point indicators available in the market, and the best one depends on the trader's preference and trading strategy. Here are some popular pivot point indicators used by traders:

1. Standard Pivot Point Indicator:
This is the most commonly used pivot point indicator that calculates the pivot point based
on the high, low, and closing price of the previous day.
2. Fibonacci Pivot Point Indicator:
This indicator uses Fibonacci levels to calculate the support and resistance levels.
3. Camarilla Pivot Point Indicator:
This indicator uses a different formula to calculate the support and resistance levels,
which is based on the previous day's price range.
4. Woodie Pivot Point Indicator:
This indicator is similar to the standard pivot point indicator but uses a different formula
to calculate the pivot point and support and resistance levels.
5. DeMark Pivot Point Indicator:
This indicator is based on the price action of the previous day and uses a different
formula to calculate the support and resistance levels.

Ultimately, the best pivot point indicator is the one that fits with your trading style and helps
you make profitable trading decisions. It is important to backtest and analyze the performance of different pivot point indicators before using them in live trading.

FAQs

Here are some frequently asked questions on pivot levels and pivot points in share market:

1. What is a pivot level in share market?

A pivot level is a technical analysis indicator used in the share market to identify potential areas of support and resistance. It is calculated based on the previous day's high, low, and close prices, and is used to predict the market's direction for the upcoming trading session.

2. What is a pivot point in share market?

A pivot point is a specific level used in technical analysis that is derived from a stock's price action from the previous day. It is a technical indicator that can be used to identify potential support and resistance levels in the market. Pivot points are used by traders to determine the direction of the market and to set up trades.

3. How are pivot points calculated in share market?

Pivot points are calculated based on the previous day's high, low, and close prices. The calculation involves adding the previous day's high, low, and close prices and dividing the sum by three. The resulting number is then used to calculate the support and resistance levels for the current trading session.

4. What are support and resistance levels in share market?

Support and resistance levels are areas on a stock chart where the price has shown a tendency to either stall or reverse in the past. Support levels are areas where the price has previously found support, and resistance levels are areas where the price has previously found resistance.

5. How can pivot levels and pivot points be used in share market trading?

Pivot levels and pivot points can be used to identify potential areas of support and resistance in the share market. Traders can use these levels to set up trades, such as buying at a support level and selling at a resistance level. Pivot levels and pivot points can also be used to identify potential entry and exit points for trades, and to set stop-loss levels.