Fibonacci Pivot Points are Pivot Points where R and S lines are calculated not with classic but with Fibonacci’s formula.

Pivot line (so the middle line) is in the same place as with classic Pivot Points because formula here is the same.

The formula for pivot line:

pivot = (high + low + close) / 3

So the difference is with formula for R and S lines.

First, have a quick look at classic Pivot Points formula for R lines:

  • R1 = 2*pivot – low
  • R2 = pivot + (high – low)
  • R3 = High + 2*(pivot – low)

And compare it with Fibonacci Pivot Points:

  • R1 = pivot + ((high – low) * .382)
  • R2 = pivot + ((high – low) * .618)
  • R3 = pivot + ((high – low) * 1.000)

And now lets check classic formula for S lines:

  • S1 = 2*pivot – high
  • S2 = pivot – (high – low)
  • S3 = low – 2*(high – pivot)

And compare with Fibonacci Pivot Points:

  • S1 = pivot – ((high – low) * .382)
  • S2 = pivot – ((high – low) * .618)
  • S3 = pivot – ((high – low) * 1.000)

You can see that it’s clearly a different approach.

At this point you might wonder – is Fibonacci Pivot Points much different than classic Pivot Points? And is it better? I’ll try to answer these two questions.

Are Fibonacci Pivot Points much different than classic Pivot Points?

They are but not so much. I would say that they are tighter. That means that usually levels will be closer than normally. Especially when we are talking about R2, R3, S2, S3 levels.

Do a quick check for classic daily Pivot Points. See how often second and third lines are hit. Not so much. As a result you end up with situation when price oscillates mostly around S1 and R1, rarely hitting second or third lines.

Check this chart with classic Pivot Points:

classic pivot points

And same chart with Fibonacci Pivot Points (I marked with blue line where were classic levels from previous chart):

fibonacci pivot points comparision

I think that it’s easy to see the difference.

Note: Of course we have 20-30% of the time where price goes through all levels because trend is so strong but that’s part of trading.

Are Fibonacci Pivot Points better than classic Pivot Points?

Remember: Pivot Points is an indicator and not ready to go system by itself. That’s why it’s hard to make simple one to one comparison.

Results depends from your strategy that you’ve built around pivot levels.

But when you ask me about my opinion my answear is: yes, Fibonacci Pivot Points are better than classic Pivot Points. In my opion price action is much different compared to times when Pivot Points where created. Some things are the same but volatility is different. We can have many slow days with lower volatility followed by days with super stron moves. It’s wider topic for another discussion. For now I just want to left you with simple advice – gibe Fibonacci Pivot Points a try and check different variants such as daily Fibonacci Pivot Points, 4-hour Fibonacci Pivot Points, weekly Fibonacci Pivot Points, and so on. Thanks to that you should see how Fibonacci Pivot Points works with your system on different time frames and with different strategies (short term, swings).

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