Pivots and Reference Levels

Key Takeaways

Pivot points are calculated price levels where a pair is likely to reverse or consolidate.
Support and resistance mark price levels traders watch to enter, exit, or place stops.
Milton Prime publishes pivot levels daily for all major pairs on the Market Hub.

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What is a Pivot Point?

A pivot point is a price level calculated from the previous day's high, low, and close. It marks the point where a pair is mathematically likely to reverse or consolidate.

Pivot calculation:

Pivot = (High + Low + Close) ÷ 3
Resistance 1 (R1) = (Pivot × 2) – Low
Support 1 (S1) = (Pivot × 2) – High

Support and Resistance

Support is a price level where buying pressure is expected to push a pair back up. Resistance is where selling pressure is expected to push it back down.

If EUR/USD is trading at 1.0900 and pivot S1 is at 1.0850, traders watch 1.0850 as potential support. If the pair breaks below it, the next support (S2) becomes the target. Vice versa for resistance (R1, R2).

Pivot levels are self-fulfilling prophecies: many traders watch them, so they work because everyone expects them to work.

Using Pivots in Your Strategy

Pivot levels are useful for:

Entry signals: Buy support, sell resistance.
Stop placement: Place stops beyond pivot levels to avoid noise.
Profit targets: Target the next resistance (or support) level.
Range identification: If trapped between S1 and R1, the pair is in consolidation.

Milton Prime publishes pivot levels for all major pairs daily. You can use them to plan your trading setups before the session opens.

Important Notes

Pivot levels work best in ranging markets where price bounces between support and resistance. During strong trending moves, a pair can blow through pivot levels without slowing down.