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Market Intelligence › Basic Terminologies
Formula-based support and resistance, and their strengths and weaknesses
Published by The Retail Trader · JUL 28, 2026 · Indicators
Pivot points calculate a set of levels for today from yesterday's high, low and close. Their biggest advantage is that they are objective: two people will arrive at the same levels.
The central pivot is the average of yesterday's three prices. Resistance and support levels above and below it are calculated by formula.
Because the formula is fixed, there is no room for opinion. That objectivity is their real utility.
Both come together:
• Strength: nearly everyone is watching roughly the same levels, so activity picks up there.
• Weakness: the levels are built from yesterday's data and today's news is not in them.
• On gap days, pivot levels become almost meaningless.
• Different variants give different levels, so it is important to stick to one variant.
Pivot levels should be combined with structure, not used in place of it. If a pivot level falls exactly where the chart already has a swing point, that level matters for two reasons, and that combination is the most useful one.
This article is for educational purposes only. It is not a buy or sell recommendation, not a claim of guaranteed returns, and not advice. Rules, rates and mechanics change from time to time at the exchanges, SEBI and the RBI, so verify every number yourself with your broker or an official source.