In short, we have middle line called pivot line. Above that line we can find R1, R2, R3 lines – these are resistance lines.

Below pivot you can see S1, S2, S3 support lines.

But there is more to that. I tried to give more detailed explanation below.

## 1. Pivot Points are not a trading system

First and most important thing. Pivot Points give you possible support and resistance zones but it’s not ready to go system.

It’s your job to build your system around Pivot Points.

## 2 How to read pivot line

When price is above pivot line and come back then pivot line might work as support. When price is below pivot line and price move up then pivot might work as reistance.

There is another way to read pivot line. When there is no strong move in one direction price tends to oscillate around pivot line. If you see such situation you can try to mark high and low of a range move around that pivot line and wait for a breakout or trade the range.

## 3. How to read R lines

We have three levels: R1, R2, R3 but if needed you can calculate R4, R5 and so on.

These are levels of potential resistance. In theory you can treat them like overbought levels where R3 is the strong overbought.

If you have an open long position you can use R levels as take profit targets for example with partial close approach.

For example you might want to close 30% at R1, move stop loss to break even, close 40% at R2 and close the rest 30% at R3. There are many combinations.

If you look for place to open a short position then R levels might be a good place to do that.

## 4. How to read S lines

We have three levels: S1, S2, S3 but if needed you can calculate S4, S5 and so on.

These are levels of potential support. In theory you can treat them like oversold levels where S3 is the strong oversold.

If you have an open short position you can use S levels as take profit targets for example with partial close approach.

For example you might want to close 30% at S1, move stop loss to break even, close 40% at S2 and close the rest 30% at S3. There are many combinations.

If you look for place to open a long position then S levels might be a good place to do that.

## 5. How to read M lines

Lets not forget about M lines – middle lines. These are simply the lines in the middle between levels. They can also work as support and resistance. I pay attention especially to M lines near 2 and 3 levels.

## 6. Which time frame and Pivot Points?

Pivot Points are based on previous time period. When we are talking about daily Pivot Points then they are calculated on previoud daily candle.

When you start to invest with Pivot Points then try pivots based on different time frames such as daily, weekly or 4-hour.

## 7. Which kind of Pivot Points

The most popular Pivot Points indicator is based on classic formula. Still, there are other types od Pivot Points such as Fibonacci Pivot Points, Woodies Pivot Points. The middle line (pivot) is the same but S and R levels are different. I highly recommend to give a try to Fibonacci Pivot Points.

## 8. Confluence of Pivot Points and other levels

When you start using Pivot Points remember that R and S levels are not the only ones that price might respect. You should check for supply, demand zones, important trend lines based on price action. If you see that there is supply zone near S level then you have confluence and this makes this level stronger.

## 9. Information from higher time frames

Always combine information based on price action from higher time frames with Pivot Points. For example inside bars, doji, pin bars from higher time frames can give you idea of next possible market move.

The same thing goes to price patterns such as double tops, head and shoulders and all important information you can get from price action.

## To sum it up

Readig Pivot Points takes time. I showed you few tips above. Remember most important thing. Don’t try to read Pivot Points as the one and only source of information. Check price action, patterns, higher time frames, trend lines.

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