Fibonacci Pivot | Syed

21 Sep 2024

Fibonacci pivots combine Fibonacci retracement levels with pivot points to provide potential support and resistance levels. This tool is based on the idea that price tends to retrace a predictable portion of a move, after which it often continues in the original direction.

Here’s a breakdown of Fibonacci pivots:

1. Pivot Point (PP)
The central level that acts as the main reference point for support and resistance levels. It’s calculated as the average of the high, low, and close of the previous period (typically a day).

Formula:

𝑃
𝑃
=
(
𝐻
𝑖
𝑔
ℎ
+
𝐿
𝑜
𝑤
+
𝐶
𝑙
𝑜
𝑠
𝑒
)
3
PP=
3
(High+Low+Close)
​

2. Fibonacci-Based Support and Resistance Levels
These levels are derived by multiplying the range (High - Low) of the previous period with key Fibonacci ratios (23.6%, 38.2%, 61.8%, etc.), then adding or subtracting this result from the Pivot Point.

The Fibonacci ratios used in Fibonacci pivots are typically:

38.2%: A strong retracement level.
61.8%: The golden ratio, a key Fibonacci level that often acts as major support or resistance.
100%: Full retracement from the previous period's high or low.
Fibonacci Support Levels (S1, S2, S3, etc.)
These levels indicate potential areas where the price might find support:

S1 = PP - (Range * 0.382)
S2 = PP - (Range * 0.618)
S3 = PP - (Range * 1)
Fibonacci Resistance Levels (R1, R2, R3, etc.)
These are the areas where price might face resistance:

R1 = PP + (Range * 0.382)
R2 = PP + (Range * 0.618)
R3 = PP + (Range * 1)
Interpretation
R1/R2/R3: Potential resistance levels where price might face selling pressure.
S1/S2/S3: Potential support levels where price might encounter buying interest.
Pivot Point (PP): Acts as the primary level of interest. If the price is above the PP, it suggests bullish sentiment; if below, bearish sentiment.
Example

21 Sep 2024

Nota Keluaran

Fibonacci pivots combine Fibonacci retracement levels with pivot points to provide potential support and resistance levels. This tool is based on the idea that price tends to retrace a predictable portion of a move, after which it often continues in the original direction.

Here’s a breakdown of Fibonacci pivots:

1. Pivot Point (PP)
The central level that acts as the main reference point for support and resistance levels. It’s calculated as the average of the high, low, and close of the previous period (typically a day).

Formula:

𝑃
𝑃
=
(
𝐻
𝑖
𝑔
ℎ
+
𝐿
𝑜
𝑤
+
𝐶
𝑙
𝑜
𝑠
𝑒
)
3
PP=
3
(High+Low+Close)
​

2. Fibonacci-Based Support and Resistance Levels
These levels are derived by multiplying the range (High - Low) of the previous period with key Fibonacci ratios (23.6%, 38.2%, 61.8%, etc.), then adding or subtracting this result from the Pivot Point.

The Fibonacci ratios used in Fibonacci pivots are typically:

38.2%: A strong retracement level.
61.8%: The golden ratio, a key Fibonacci level that often acts as major support or resistance.
100%: Full retracement from the previous period's high or low.
Fibonacci Support Levels (S1, S2, S3, etc.)
These levels indicate potential areas where the price might find support:

S1 = PP - (Range * 0.382)
S2 = PP - (Range * 0.618)
S3 = PP - (Range * 1)
Fibonacci Resistance Levels (R1, R2, R3, etc.)
These are the areas where price might face resistance:

R1 = PP + (Range * 0.382)
R2 = PP + (Range * 0.618)
R3 = PP + (Range * 1)
Interpretation
R1/R2/R3: Potential resistance levels where price might face selling pressure.
S1/S2/S3: Potential support levels where price might encounter buying interest.
Pivot Point (PP): Acts as the primary level of interest. If the price is above the PP, it suggests bullish sentiment; if below, bearish sentiment.
Example
Let’s say the previous day's high is 110, the low is 100, and the close is 105. The range (High - Low) is 10.

PP = (110 + 100 + 105) / 3 = 105
S1 = 105 - (10 * 0.382) ≈ 101.18
S2 = 105 - (10 * 0.618) ≈ 98.82
R1 = 105 + (10 * 0.382) ≈ 108.82
R2 = 105 + (10 * 0.618) ≈ 111.18
These levels are then plotted on the chart to anticipate future price movements.

Why Use Fibonacci Pivots?
They combine the precision of Fibonacci retracements with the market-tested accuracy of pivot points.
Traders use them to identify key levels of support/resistance.
They work well for short-term traders looking to scalp or catch trend reversals.
Fibonacci pivots provide a strategic framework to anticipate price reactions at these critical levels, allowing traders to plan their entries, exits, and stop-loss placements accordingly.