Very simply OHLC is an acronym for Open, High, Low and Close. It describes these metrics for the previous trading day/week/month. The OHLC whilst offering its own very valuable input for Support and Resistance is also the basis for a wide range of calculations derived from it which will be described in the next section.
Pivot Points are generally mathematically derived Support and Resistance levels, from the OHLC of the previous trading day, using a variety of formulas with names including, Standard, Camarilla, Woodie, Floor and DeMark.
To calculate the Standard Pivots the formulas below are used. This formula uses the range of the given time frame, daily, weekly, monthly etc. Which is calculated by (High-Low), R1-R4 denote Resistance Levels, PP describes the Pivot Point, S1- S4 are Support levels.
R4 = R3 + (H - L)
R3 = R2 + (H - L)
R2 = PP + (H - L)
R1 = (2 * PP) - LOW
PP = (HIGH + LOW + CLOSE) / 3
S1 = (2 * PP) - HIGH
S2 = PP - (H - L)
S3 = S2 - (H - L)
S4 = S3 - (H - L)
To calculate the Camarilla Pivots the formulas below are used. This formula uses the range of the given time frame, daily, weekly, monthly etc. Which is calculated by (High-Low), R1-R4 denote Resistance Levels, S1- S4 are Support levels. The actual Camarilla number set does not have a PP and includes the Close (C) in its calculation
R4 = (H - L) * 1.1/2 + C
R3 = (H - L) * 1.1/4 + C
R2 = (H - L) * 1.1/6 + C
R1 = (H - L) * 1.1/12 + C
S1 = C - (H - L) * 1.1/12
S2 = C - (H - L) * 1.1/6
S3 = C - (H - L) * 1.1/4
S4 = C - (H - L) * 1.1/2
To calculate the Woodie Pivots the formulas below are used. This formula uses the range of the given time frame, daily, weekly, monthly etc. Which is calculated by (High-Low), R1-R4 denote Resistance Levels, PP describes the Pivot Point, S1- S4 are Support levels. This formula also includes the Open.
R4 = R3 + (H - L)
R3 = H + 2 * (PP - L)
R2 = PP + (H - L)
R1 = (2 * PP) - LOW
PP = (HIGH + LOW + (OPEN * 2)) / 4
S1 = (2 * PP) - HIGH
S2 = PP - (H - L)
S3 = L - 2 * (H - PP)
S4 = S3 - (H - L)
To calculate the Floor Pivots the formulas below are used. R1-R3 denote Resistance Levels, PP describes the Pivot Point, S1- S3 are Support levels.
R3 = (P - S1) + R2
R2 = (P - S1) + R1
R1 = (2*P) - L
PP = (H + L + C)/3
S1 =(2*P) – H
S2 = P - (R1 - S1)
S3 = P - (R2 - S1)
To calculate the DeMark Pivots the formulas below are used. This calculation method differs slightly from the others in terms of its structure, The PP is not an official DeMark Number but is required to calculate the formula.
The value of X in the formula below depends on where the Close of the market is.
If Close < Open then X = (H + (L * 2) + C)
If Close > Open then X = ((H * 2) + L + C)
If Close = Open then X = (H + L + (C * 2))
R1 = X / 2 - L
PP = X / 4
S1 = X / 2 - H |