How to Calculate Pivot Points
Let’s start with the basics — how pivot point levels are calculated.
Pivot points, along with their support and resistance levels, are based on the previous trading session’s open, high, low, and close prices.
Since the forex market runs 24 hours a day, most traders consider 5:00 PM EST (New York close) as the end of the trading day.
Pivot Point Formula
Here’s how the main pivot point (PP) is calculated:
PP = (High + Low + Close) / 3
Once you have the pivot point, you can calculate the support and resistance levels:
First support and resistance:
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R1 = (2 × PP) – Low
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S1 = (2 × PP) – High
Second support and resistance:
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R2 = PP + (High – Low)
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S2 = PP – (High – Low)
Third support and resistance:
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R3 = High + 2 × (PP – Low)
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S3 = Low – 2 × (High – PP)
Some charting platforms may also show intermediate (or mid-point) levels, which are smaller levels between the main pivot and support/resistance lines. These can give you more detailed guidance, especially in choppy markets.
Don’t Like Math? No Problem!
If algebra isn’t your thing, don’t worry — most trading platforms calculate pivot points automatically. Just make sure the platform is using the correct time zone and price data.
And if you want to experiment or backtest, you can use the Pivot Point Calculator at BabyPips.com!
Since pivot points are based on a consistent formula, they’re great for backtesting — you can easily analyze how price has reacted to those levels in the past.
What’s Next?
Now that you know how pivot points are calculated, we’ll show you different ways to use them in your trading strategy. Let’s get to it!