PP = (H + L + C) / 3

then

* R1 = (2*PP) - L

* R2 = PP + (H - L)

* R3 = H + 2*(PP-L)

* S1 = (2*PP) - H

* S2 = PP - (H - L)

* S3 = L - 2*(H - PP)

If there is support close to the PP, one will first wait for the price to pass through both the PP and the support before entering short. If there is resistance close to the PP, one will first wait for the price to move through both the PP and the resistance before entering long.

This method becomes even more powerful when the PP is close to the opening price. If, for example, the opening price is 5174.10, the PP is 5164.10, and if one eventually goes short at 5155, one can stay short the whole day as long as price does not go above the Pivot Point.

Once in a position one normally have a very tight stop to begin with and then will follow the market with a trailing stop to lock in profits.

The Pivot Point of a Yearly, Monthly and Weekly Bars can be calculated from the High, Low and Close of the previous Year, Month and Week.

Weekly Pivot Point can be used as indicator for the short-term trend, the monthly as the medium term trend and the Yearly as the long-term trend. Some find this particularly useful in Spot Forex. If one is below the yearly, monthly and weekly Pivot Point, one knows one is in a strong down trend and one can scale into multiple positions over time. The same holds true for long positions.