The pivot point is usually explained as a predictive indicator. It is calculated by these formulas, which can also be found on the internet:
Resistance 3 = High + 2*(Pivot – Low)
Resistance 2 = Pivot + (R1 – S1)
Resistance 1 = 2 * Pivot – Low
Pivot Point = ( High + Close + Low )/3
Support 1 = 2 * Pivot – High
Support 2 = Pivot – (R1 – S1)
Support 3 = Low – 2*(High – Pivot)
These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels. This is also the way floor traders can identify possible support or resistance levels for the day. From my own experience I can say that they tend to work on a quiet days best.
