Calculating Pivot Point (2)
Fibonacci Pivot Level Method
The same classical formula is used to calculate the main pivot level for the Fibonacci method but then the Fibonacci retracement level in the range of the previous period range is used to determine the various support and resistance levels. The main Fibonacci retracement levels are 100%, 61.8%, 50%, and 38.2% respectively.
Pivot DeMark Level Method
DeMark’s pivot level method was developed by Tom DeMark and very different from other pivot level methods. For the DeMark pivot level, the main pivot level is not significant. Only significant level of R1 and S1 pivot. However, the calculations for R1 and S1 differ depending on whether the previous closing period is higher, lower or equal to the previous period. If the lid is higher, then the high level is given more weight; If the lid is lower, then the low level is given more weight; and if the close level is equal to the open level, then the close level is given more weight. For each of these conditions, X is calculated and R1 and S1 are determined using the formula:
S1 = X / 2 – Low previous and R1 = X / 2 + High before
for R1 and S1 respectively.
If the previous closing period is higher than open ie the previous period closed above open then X is calculated by using the formula:
X = (2 x High previous) + Low previous + Close before
If the previous closing period is lower than open ie the previous period closed below open then X is calculated by using the formula:
X = High previous + (2 x Low previous) + Close before
Lastly, if the close of the previous period is at the same level as open then X is calculated by using the formula:
X = previous High + Low previous + (2 x Close before)
Some traders calculate the main pivot level using the formula PP = X / 4, but this is not the “official” DeMark level.
Well, this pivot level will be useful for you who want to take advantage of the identification of support and resistance levels in mathematical calculations.