1.

School of Pipsology
2. Middle School

Know the 3 Other Types of Pivot Points

The standard method of calculating pivot points is NOT the only way to calculate
pivot points.

Just like listening to BTS is not the only way to listen to K-pop. (Blinks!
Annyeonghaseyo!)

Traders have worked on improving the original pivot point and now there are other
ways to calculate for pivot points.

In this lesson, we will talk about these other methods, as well as give you the
formulas on how to calculate for these levels.

Woodie Pivot Point

R2 = PP + High – Low

R1 = (2 X PP) – Low

PP = (H + L + 2C) / 4

S1 = (2 X PP) – High

S2 = PP – High + Low

C – Closing Price, H – High, L – Low

In the formulas above, you’ll notice that the pivot point calculation is very different
from the standard method.
Also, in order the calculate the corresponding support and resistance levels, you
would use the difference between the previous day’s high and low, otherwise known
as the range.
Here’s a chart example of the Woodie pivot point calculation applied on EURUSD.

The Woodie pivot point, support levels, and resistance levels are the solid lines
while the dotted lines represent the levels calculated through the standard method.

Because they have different formulas, levels obtained through the Woodie
calculations are very different from those gotten through the standard method.

Some traders prefer to use the Woodie formulas because they give more weight to
the closing price of the previous period.
Others prefer the standard formulas because many traders make use of those,
which could make them self-fulfilling.

In any case, since resistance turns into support (and vice versa), if you choose to
use the Woodie formulas, you should keep an eye on these levels as they could
become areas of interest. Whatever floats your boat!

Camarilla Pivot Point

R4 = C + ((H-L) x 1.5000)
R3 = C + ((H-L) x 1.2500)

R2 = C + ((H-L) x 1.1666)

R1 = C + ((H-L) x 1.0833)

PP = (H + L + C) / 3

S1 = C – ((H-L) x 1.0833)

S2 = C – ((H-L) x 1.1666)

S3 = C – ((H-L) x 1.2500)

S4 = C – ((H-L) x 1.5000)

C – Closing Price, H – High, L – Low

The Camarilla formulas are similar to the Woodie formula. They also use the
previous day’s close and range to calculate the support and resistance levels.

The only difference is that you should calculate for 8 major levels (4 resistance and
4 support), and each of these levels should be multiplied by a multiplier.
The main concept of Camarilla pivot points is that it is based on the idea that price
has a natural tendency to revert back to the mean (sound familiar?), or in this case,
the previous day’s close.

The idea is that you should buy or sell when the price reaches either the third
support or resistance level.

However, if the price were to burst through S4 or R4, it would mean that the intraday
trend is strong, and it’s about time you jump on that bandwagon!
Check out how the Camarilla calculation gives different levels (solid lines) compared
to the standard method’s levels (dotted lines)!

As you can see from the chart above, more emphasis is given to the closing
price as opposed to the pivot point.

Because of this, it’s possible that resistance levels could be below the pivot point or
support levels could be above it.

See how all the support and resistance levels are above the Camarilla pivot point?

Fibonacci Pivot Point

R3 = PP + ((High – Low) x 1.000)

R2 = PP + ((High – Low) x .618)

R1 = PP + ((High – Low) x .382)

PP = (H + L + C) / 3

S1 = PP – ((High – Low) x .382)

S2 = PP – ((High – Low) x .618)

S3 = PP – ((High – Low) x 1.000)

C – Closing Price, H – High, L – Low

Fibonacci pivot point levels are determined by first calculating the pivot point like
you would the standard method.

Next, multiply the previous day’s range with its corresponding Fibonacci level. Most
traders use the 38.2%, 61.8% and 100% retracements in their calculations.
Finally, add or subtract the figures you get to the pivot point and voila, you’ve got
your Fibonacci pivot point levels!

Look at the chart below to see how the levels calculated through the Fibonacci
method (solid lines) differ from those calculated through the standard
method (dotted lines).

The logic behind this is that many traders like using the Fibonacci ratios. People use
it for retracement levels, moving averages, etc.

Why not use it for pivot points as well?

Remember that both Fibonacci and pivot point levels are used to find support and
resistance.

With so many traders looking at these levels, they can actually become self-
fulfilling.

Which pivot point method is best?

The truth is, just like all the variations of all the other indicators that you’ve learned
so far, there is no single best method.

It really all depends on how you combine your knowledge of pivot points with all the
other tools in your trading toolbox.

Just know that most charting software that do automatic calculations normally use
the standard method in calculating the pivot point levels.

But now that you know how to calculate these levels on your own, you can give
them all a swing and see which one works best for you. Pivot away!

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