Pivot points are a simple and effective technical tool based on the previous day's prices (high, low, and close) to calculate key support and resistance levels for the current session. For example, if the price of BTC/USDT today reaches 107,407 USD with a trading range between 106,742 and 110,277 USD, pivot points serve as an accurate reference to guide trading decisions.
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1. Calculate key points
PP (Pivot Point) = (High_prev + Low_prev + Close_prev) / 3
R1, R2 (resistances) and S1, S2 (supports) are calculated based on PP:
R1 = (2 × PP) – Low_prev
S1 = (2 × PP) – High_prev
2. Determine the trend
Trading above PP indicates a bullish trend.
Trading below PP indicates a bearish trend.
Confidence can be strengthened by indicating the price is above/below the 50 or 200-day moving average.
3. Entry and exit points
Buy on the breakout of the first resistance R1 with confirmation of strong trading volume.
Short sell when breaking the first support S1, taking profits near S2 or PP.
Place a stop-loss below the next support (for buyers) or above the next resistance (for sellers).
4. Integrate supporting indicators
Integrate RSI to avoid buying at overbought levels (≥70) or selling at oversold levels (≤30).
Use MACD to confirm momentum reversal at line crossovers.
5. Risk management
Do not risk more than 1–2% of your capital on a single trade.
Have a clear plan: stop-loss level and profit target with a risk/reward ratio of at least 1:2.
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We invite you to try this strategy in today's trading session and share your results or any questions about adjusting levels and entry timing!