29 Oct, 2025
4 mins read
Intraday traders rely on precise levels to plan entries and exits, and few tools are as widely used as pivot points. Derived from the previous day’s price data, pivot points act as key reference levels that help traders identify potential support, resistance, and market bias for the current session. Simple to calculate yet powerful in application, they bring structure and discipline to short-term trading - especially in fast-moving markets like the NSE and BSE.
Pivot points are straightforward price levels derived from the previous session’s high, low and close. Traders use them as reference markers to identify likely support and resistance zones during the current trading day. If the price stays above the pivot point, the market is typically viewed as bullish for the session. If it trades below, sentiment is considered bearish. Pivot points are popular because they are fixed for the day and provide clear targets for entries, exits and stop losses.
The classic pivot point formula uses the prior day’s high (H), low (L) and close (C):
|
Pivot Point (P) = (H + L + C) / 3 |
From P, you can derive support and resistance levels:
Resistance 1 (R1) = (2 × P) − L
Support 1 (S1) = (2 × P) − H
Resistance 2 (R2) = P + (R1 − S1)
Support 2 (S2) = P − (R1 − S1)
Most charting platforms calculate these automatically. Still, knowing the math helps you understand why those lines matter and how they react when price approaches them.
Pivot points serve several intraday roles:
Gauge market bias: Prices above the pivot point suggest buyers are in control.
Plan trades with structure: R1, R2, S1 and S2 provide targets and stop placement ideas.
Confirm setups: Use pivot levels with candlestick patterns or volume to increase confidence.
Time entries: Early session volatility often respects pivot levels, so first-hour moves can be informative.
Combine pivot points with moving averages or RSI for higher-probability signals instead of relying on them alone.
A few common strategies used by traders on NSE and BSE:
Bounce from support/resistance - Enter when price shows a reversal signal near S1 or R1 with a tight stop.
Pivot point breakout - Buy on a convincing break above R1 with strong volume; place stop near the pivot.
Combine with price action - Look for candlestick confirmations like hammers or engulfing patterns at pivot levels.
Time-based filtering - Use pivot signals selectively during the first and last hours of trading when liquidity is highest.
These methods are practical and align well with the structure of Indian intraday trading sessions.
Suppose Nifty levels on Monday were: High = 19,850; Low = 19,650; Close = 19,700.
Compute the pivot:
P = (19,850 + 19,650 + 19,700) / 3 = 19,733.33
Then:
R1 = (2 × 19,733.33) − 19,650 = 19,816.66
S1 = (2 × 19,733.33) − 19,850 = 19,616.66
If Nifty opens at 19,720 and rallies above the pivot, traders may view that as bullish for the day and look to R1 as a realistic near-term target. Stop losses can be placed just below the pivot to keep risk defined.
Pivot points are favoured for several reasons:
Simple to compute and interpret.
Fixed reference levels for the trading day.
They integrate well with other technical tools.
Widely used, so they often become a self-fulfilling part of market structure.
No indicator is perfect, and pivot points have limitations:
They can be less reliable in strong trending markets where price eclipses all pivot levels.
False signals occur in low-volume or sideways sessions.
They are backward looking, relying on yesterday’s data; sudden news can make them obsolete.
Use them as part of a toolbox, not as the only guide for trading decisions.
Pivot points are a practical, no-nonsense tool for intraday traders. When combined with price action, volume, and other indicators, they can help define trades with clear risk-reward parameters. For Indian traders, they are especially useful during the volatile opening and closing periods when levels are respected most.
A pivot point is a calculated level based on the previous day’s high, low and close that acts as a reference for support and resistance during the current session.
Yes, many intraday traders on the Nifty use pivot points. They are helpful, especially when combined with other indicators, though they are not foolproof.
Besides the standard pivot, traders use versions such as Fibonacci, Woodie’s, Camarilla and Demark pivot points, which modify the calculation or weighting.
Yes. A clean breakout above R1 or below S1 with convincing volume can be used to confirm and trade breakout setups.
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