Here's why pivot points are a must for any profitable trading model

The basic idea is to determine the crucial levels that might trigger major moves in the stock.

Pivot points are the price levels that help traders determine directional movement and potential support/resistance levels of a stock/index. These are calculated considering the open, high, low, and close of the previous sessions. Market participants consider pivot levels as turning points, besides looking at support and resistance.

In any charting tool, one would find a minimum of five pivot points, including support and resistance levels. They are calculated as follows:

S1 (Support 1) = Pivot Point * 2 – Previous High

S2 ((Support 2) = Pivot Point – (Previous High – Previous Low)

Pivot Point (P) = (Previous High +