The study called Pivot Point, also draws R1, R2...etc S1, S2...etc. What are those (how are they calculated)?

Modified on 2011/09/12 16:11 by Nate Ostrye (CTS) — Categorized as: Uncategorized

PP is the pivot point line. R1, R2, … and S1, S2, … are the computed support and resistance levels. The computation depends on how the user configures the settings.

The High, Low, Close prices described below are taken from the target bar which defaults to yesterdays daily bar (Bar Interval = 1 Day, Bars Back = 1).

There are 4 methods.

Method 1: Floor (default)

PP = (High + Low + Close) / 3

R1 = (2 * PP) – Low

R2 = PP + High – Low

R3 = High + (2 * (PP – Low))

S1 = (2 * PP) – High

S2 = PP – High + Low

S3 = Low – (2 * (High – PP))

Method 2: Woodie

PP = (High + Low + (2 * Close)) / 4

R1 = (2 * PP) – Low

R2 = PP + (High – Low)

R3 = High + (2 * (PP – Low))

R4 = PP + ((High – Low) * 3)

S1 = (2 * PP) – High

S2 = PP – (High – Low)

S3 = Low – (2 * (High – PP))

S4 = PP – ((High – Low) * 3)

(Some systems use the next day’s Open instead of the Close price for PP.)

Method 3: Camarilla (support and resistance lines only)

R1 = Close + ((High – Low) * 1.1 / 12.0)

R2 = Close + ((High – Low) * 1.1 / 6.0)

R3 = Close + ((High – Low) * 1.1 / 4.0)

R4 = Close + ((High – Low) * 1.1 / 2.0)

S1 = Close - ((High – Low) * 1.1 / 12.0)

S2 = Close - ((High – Low) * 1.1 / 6.0)

S3 = Close - ((High – Low) * 1.1 / 4.0)

S4 = Close - ((High – Low) * 1.1 / 2.0)

Method 4: Demark

If today’s open > yesterday’s close: X = High + (2 * Low) + Close

If today’s open < yesterday’s close: X = (2 * High) + Low + Close

If today’s open = yesterday’s close: X = High + Low + (2 * Close)

Then…

PP = X / 4 R1 = (X / 2) – Low S1 = (X / 2) – High

As far as the strengths and weaknesses of any of the above methods… Google would be the best resource. Also, the Support/Resistance lines can be hidden by setting “Support/Resistance Levels” to 0 in the settings. Midpoint lines can also be added by checking the appropriate checkbox.